Paying Taxes

2017
+1

Now including a
new measure: the
post-filing index.

www.pwc.com/payingtaxes
Contacts

PwC* World Bank Group

Stef van Weeghel Augusto Lopez-Claros
Leader, Global Tax Policy and Director
Administration Network Global Indicators Group
PwC Netherlands +1 202 458 8945
+31 88 792 6763 alopezclaros@ifc.org
stef.van.weeghel@nl.pwc.com

Andrew Packman Rita Ramalho

Tax Transparency and Manager
Total Tax Contribution leader Doing Business Unit
PwC UK +1 202 458 4139
+44 1895 522 104 rramalho@ifc.org
andrew.packman@uk.pwc.com

Neville Howlett Joanna Nasr

Director External Relations, Tax Private Sector Development Specialist
PwC UK Doing Business Unit
+44 20 7212 7964 + 1 202 458 0893
neville.p.howlett@uk.pwc.com jnasr@worldbank.org

Tom Dane Hulya Ulku

Senior Manager, Tax Senior Economist
PwC UK Doing Business Unit
+44 20 7804 7712 + 603 2263 4906
thomas.a.dane@uk.pwc.com hulku@worldbank.org

*
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate
2legal entity. Please
Payingsee www.pwc.com/structure
Taxes 2017 for further details.
 Contents

Foreword 2
Key findings 4
What this publication covers 12
Chapter 1 World Bank Group commentary 18
Chapter 2 PwC commentary 30
Chapter 3 Country articles 58
Costa Rica Digital innovation to increase voluntary compliance 60
Cte dIvoire Achieving tax reform and broadening the taxable base 62
Ecuador Pressures on government finances leading to increased tax regulation 64
Hungary Slow but steady improvements to the tax system 66
Indonesia Improvements realised and more to come 68
Chapter 4 Beyond Paying Taxes: Tax policy and administration 70
A role for corporates in tax system reform 71
The rising importance of consumption taxes in government tax revenues 80
Appendix 1 Methodology and example calculations for Paying Taxes sub-indicators 88
Appendix 2 Economy sub-indicator results by region 102
Appendix 3 The data tables 124

Foreword 1
 Foreword
This eleventh edition of Paying Taxes comes at a time
when, with low commodity prices and continued
weak economic growth, there is an increasing need
to broaden tax bases, increase voluntary compliance
and build tax capacity, particularly in developing
economies. Everyone benefits if tax systems are well
understood and are effective and efficient. To achieve
this, systems need to minimise the administrative
burden that they place upon governments and
Andrew Packman Augusto taxpayers while raising the revenues that are needed
Lopez-Claros
Tax Transparency to fund public services.
and Total Tax Director, Global
Contribution leader Indicators Group
The Paying Taxes study looks at how easy it is for a
PwC UK The World Bank
standardised, medium-sized domestic company to pay
Group
its taxes. By gathering and analysing comprehensive
quantitative data to compare business taxation over
time and across economies, Paying Taxes encourages
economies to move towards more efficient systems,
offers measurable benchmarks for reform, and serves
as a resource for academics, journalists, private sector
researchers and others interested in tax systems.

How easy it is to pay taxes is not just about the

amount of tax paid. It also concerns the compliance
and administrative requirements necessary to
determine and pay the amount due. As in previous
years, the study measures the amount of tax that
the case study company bears and the time and
effort required to deal with preparing and filing
its tax returns. We can now look at trends in these
measures over an eleven year period. In addition, this
year, for the first time, the study includes a post-
filing index which measures certain processes that
might take place after a tax return has been filed.
For many companies these can represent the most
complex interactions with a tax authority and in
many economies the process of agreeing the final tax
liabilities and, potentially, obtaining refunds of taxes
paid, can be complex and time-consuming.

2 Paying Taxes 2017

 In many economies, post-filing processes can be the
most complex interactions between tax authorities
and taxpayers.
The challenge has been to create some simple fact
patterns which allow a like-for-like comparison to
be made across as many economies as possible. To
do this, we have created an index which measures
two specific processes; obtaining a value-added
tax (VAT) refund, and dealing with a voluntary
correction of an inadvertent error in a corporate
income tax (CIT) return, including dealing with
an audit if applicable. Where these taxes do not
exist in an economy, then the index simply does not
measure the post-filing position for that type of tax
in thateconomy.
Further details on how the new index is
measured and its four components can be found
in Appendix1. For the VAT refund, the best
performing economies are those which offer a
cash refund in the shortest possible time, with the
minimum amount of effort. Where the VAT refund
claim is likely to trigger an audit, this is taken into
account and will usually increase both the time to
comply with the refund claim and the waiting time
before the refund is received. For the correction of
the CIT error, the best performing economies are
those where the correction of the tax return is not
expected to trigger an audit. In these cases, the
index simply measures the time required to make
the correction as there is no audit time to be taken
into account.
Tax audits are an essential part of a properly
functioning tax system as they help ensure that
taxpayers meet their compliance obligations.
There is however a balance to be struck between
the extent and nature of a tax audit and the
amounts of tax that are potentially being
underpaid, to help ensure that the limited
resources available to tax authorities are targeted
at the areas which present the highest risk.
1
 leary, D. Predictive Analytics in the Public Sector: Using Data Mining to Assist Better Target Selection for Audit Electronic Journal of e-Government
C
Volume 9 Issue 2 2011, (pp132 140), available online at www.ejeg.com/volume9/issue2
We have long advocated the introduction of
good electronic systems for paying and filing
tax returns. These benefit both taxpayers and
tax authorities. Electronic systems provide vast
amounts of data which tax authorities can analyse
and correlate with other datasets to identify
unusual transactions and patterns of behaviour
and so assess the level of risk presented by
individual companies.1 In countries where such
electronic data is unavailable, or is unreliable, then
more audits may be required than in economies
with large electronic datasets and sophisticated
data analysis tools. Care should therefore be taken
when comparing the post-filing index scores of
different economies which are at varying stages of
economic development and which have differing
levels of sophistication in their tax systems.
The introduction of the new post-filing index has
been a significant challenge, but we hope that it
provides valuable insight to you and we welcome
suggestions for how the index can be improved.
This publication also includes two articles which
look beyond the case study. The first article
considers that while paying taxes is an important
part of how companies contribute to society,
companies may have more to offer. We explore the
role corporates can play in reforming tax systems
and consider some of the barriers that inhibit this.
The second article looks at the rising importance
of consumption taxes to governments and the
challenges of creating effective and efficient
VATsystems.
We hope that this publication continues to generate
data and different perspectives that you find
useful. Your comments and feedback are always
very welcome and we would be delighted to hear
from you.
Andrew Packman Augusto Lopez-Claros
Foreword 3
Key findings from the
Paying Taxes 2017 data
On average it takes our case study company 251 hours to comply with its taxes,
it makes 25 payments and has an average Total Tax Rate of 40.6%.

Total Tax Rate Time to comply Number of payments

New!
40.6% 251 25 Post-filing
hours
index
Do

Do

Do
w

w
n

0.1% 8 0.8

The three original sub-indicators have continued to fall in 2015; Total Tax Rate by 0.1 percentage points, time to comply
by 8 hours, and the number of payments by 0.8.

Other
taxes

Profit Labour
44 38 8 24
taxes taxes

The small decrease in the Total Tax Rate

results from 44 economies increasing
taxes while 38 recorded a reduction. The fall in the payments sub-indicator is
It also represents a combination of a the result of an overall decrease of 199
decrease in other taxes offset by small payments across 24 economies, largely
increases in both profit and labour taxes. due to the introduction and use of
electronic filing and payment systems.
Eight economies however, introduced
The reduction of 8 hours in new taxes without such systems,
the global average for the time increasing payments by 36 in total.
to comply is higher than in
recent years reflecting ongoing
improvements in electronic tax
systems, and in particular the
adoption of reforms in Brazil.
4 Paying Taxes 2017
The Paying Taxes study includes a new sub-indicator,
the post-filing index. It measures two processes 2 3 (1) The post-filing index
using four components. It is equally weighted with VAT distance to frontier score (DTF)
14.2 21.6
the three original sub-indicators. hours weeks measures (2) the time to comply
with a VAT refund (hours),
16.7 17.3 (3) the time to obtaina VAT
hours weeks
CIT refund (weeks),(4) the time to
4 5 comply with a corporate income
61.24
DTF tax audit (hours), and (5) the
time to complete a corporate
1
income tax audit, if applicable
(weeks).

93
In 2015, 162
economies had a VAT
system. The post-filing
index shows that our
case study company will VAT
receive a VAT refund in For those economies where a VAT refund is
available, on average it takes our case study
14.2 21.6
93 of these jurisdictions. hours weeks
The VAT refund is likely company 14.2 hours to comply with the
to trigger an audit in 65 necessary administration, and 21.6 weeks 16.7 17.3
hours weeks
economies of which 17 will to receive the refund. CIT

be a comprehensive audit. 61.24

DTF

74
180 economies levied corporate
income tax in 2015. The post-filing
index shows that correcting a
corporate income tax return is likely
to lead to a tax audit in 74 of these,
VAT On average, it takes the case study of which 38 will be a comprehensive
14.2 21.6 company 16.7 hours to correct audit.
hours weeks
the error in the corporate income
16.7 17.3 tax return, including responding
hours CIT
weeks to an audit if one is triggered. For
economies where the correction
61.24 process triggers an audit, it takes
DTF
on average 17.3 weeks to complete
theaudit.

Key findings 5
Key findings from the
post-filing index data
162 3.2
162 economies have a VAT
system. The case study
company files VAT on a
monthly basis in 130
of them.
0
hrs
In 9 economies it takes zero
hours to comply with a VAT
refund. The longest time
to comply with VAT refund
requirements is in Fiji at
73hours.
6 Paying Taxes 2017
High income
=less time
On average it takes less time
to comply with a VAT refund
in high income economies, In 2015, 180 economies
The shortest time taken
(almost 8 hours) than in low levied a corporate
to receive a VAT refund is
income economies (almost income tax.
3.2 weeks in Austria. The
27 hours).
longest time to receive a VAT
6
refund is 106.2 weeks in
More
Cabo Verde.
hours
106.2 quickly
On average, the case study
company spends 6 hours
14
correcting an error in a
In high income economies, corporate income tax return
our case study company will before an audit (if any)
on average obtain a VAT takesplace.
refund more quickly (in
59%
almost 16 weeks) than low
income economies (just over
28 weeks).
If the case study company
is unlikely to be audited,
the global average time to
obtain a VAT refund is just
of economies
over 14 weeks. If there is
Globally, in 59% of the
likely to be an audit, it is
economies with corporate
almost 25 weeks.
income tax, the tax authority
25
would not be expected
to audit the case study
company as a result of the
weeks corporate income tax error.

The post-filing index distance
to frontier (DTF) score has four
components.2
For the case study company,
the corporate income tax
correction is likely to trigger
an audit in 59% of low
income economies, compared
with 24% of high income
economies.
33
hours
vs 5 hours 16
If a corporate income tax
audit is triggered, for the
case study company, the
compliance time is almost
33 hours. If there is no audit,
the compliance time is just
over 5 hours.
See page 15 for more details.
2
13
high income
hrs
28
hrs
low income
On average, in high income
economies the time to
correct an error and comply
with any corporate income
tax audit is almost 13 hours
which is less than half that
in low income economies
where it is almost 28 hours.
weeks
low income
17
weeks
high income
If a corporate income tax
audit is triggered, the audit
lasts on average almost
16 weeks in low income
economies but almost
17 weeks in high income
economies.
14.2
hours
16.7
hours
EU & EFTA
=BEST
The EU & EFTA region
performs the best, on average,
across the post-filing index
with just over 7 hours to claim
a VAT refund, almost 15
weeks to receive the refund,
and nearly 5 hours to correct
a corporate income tax return
and comply with any
resulting audit.
AUDIT
UNLIKELY Asia Pacific
If a corporate income tax
audit takes place, it will last
almost 11 weeks. In 84% of
the economies in the EU &
EFTA region, the corporate
income tax error is unlikely
to trigger an audit.
VAT
21.6
weeks
17.3
weeks
CIT
61.24
DTF
Central
America &
the Caribbean
On average, in the Central
America & the Caribbean
region our case study
company needs the most
time to obtain a VAT refund
with nearly 20 hours for
compliance and an almost
35 week wait to receive
the refund.
Most time
Economies in the Asia Pacific
region take the longest to
comply with a corporate
income tax audit for the case
study company requiring
just over 24 hours.
Middle East
In the Middle East, if a
corporate income tax audit is
triggered, it will last almost
27 weeks the longest of
any region.
Key findings 7
Key findings the regional
picture3

Africa The region fares better on

Still a difficult region for post-filing. For the case study
paying taxes. It has the highest scenario, correcting a corporate
average number of payments, income tax return would be
and the second highest Total likely to trigger a tax audit in 51%
Tax Rate and time to comply. of African economies, but the
The Total Tax Rate continued to completion time for those audits,
increase (due to implementing is less than the global average.
minimum tax rates and VAT
increasing social security 18.8 27.3
hours weeks
contributions) while the time
to comply decreased thanks to 18.5 15.9
hours weeks
improvements in accounting CIT
software and electronic systems
47.1 307 36.7 55.29
for paying and filing tax returns. % hours payments DTF

Asia Pacific For the post-filing index, the

The region performs better
than the global average on all
sub-indicators, apart from the
new post-filing index. Time
to comply and the number of
payments continue to fall, but
the Total Tax Rate has increased
slightly. The time to comply and
the number of payments fell
due to electronic systems being
introduced or improved. The
Total Tax Rate increased slightly
as labour taxes and business
rates increased in the region.
processes take longer than the
global average for all measures
apart from the time to obtain a
VAT refund. It has the longest
average time of any region
to comply with a corporate
income tax audit and in 45% of
economies a corporate income
tax audit isexpected.
VAT
16.9 20.5
hours weeks
24.4 18.3
hours weeks
CIT

36.2 212 23.5 58.53

% hours payments DTF

For a list of which economies are in which region, see the regional charts in Appendix 2.
3

8 Paying Taxes 2017

 Each region now has a post-filing distance to
frontier score (DTF) from 0 (least efficient) to
100(most efficient).4

Central America & The region does not fare well

the Caribbean on the post-filing measures.
The Total Tax Rate and All four components of the
number of payments sub- post-filing index take longer
indicators for the region have than the global averages. The
continued to fall, with changes region takes the longest time to
to profit taxes and improved comply with, and to obtain, a
use of electronic systems. There VAT refund.
has been a slight increase in the
time to comply resulting from VAT
19.6 34.7
the introduction of VAT in The hours weeks
Bahamas. It remains the region
where profit taxes account for 22.8
hours weeks
20.5

the greatest share of the Total CIT

Tax Rate, but the lowest share of 41.6 210 32.8 47.01
% hours payments DTF
the time to comply.

Central Asia & Eastern The region fares better than

Europe
This region continues to
perform well for the Total Tax
Rate, time to comply and for
payments all of which are
below the global averages
and have fallen this year. The
region has recorded the largest
decrease this year of any region
in the number of payments due
most regions in the post-filing
index with better than average
global results for three of the
components: time to obtain a
VAT refund, time to comply with
and time to complete a corporate
income tax audit.
VAT
15.9 19.3
hours weeks

to the continued introduction 10.3 11.0

and improvement of electronic hours weeks
CIT
systems, and the abolition
34.2 233 18.4 64.49
oftaxes. % hours payments DTF

See page 15 for more details.

4

The regional picture 9

 EU & EFTA The region performs the best
All three of the original on the post-filing index and
sub-indicators are below the across each of its components.
global average with the Total This is largely due to the
Tax Rate and time to comply small number of economies
still falling. Almost two thirds which will audit the corporate
of the economies in the region income tax return for the error
made changes which affected correction and because VAT
their Total Tax Rates, mostly refunds are available in all
by small amounts, across the applicable economies.
range of profit, labour and VAT
other taxes. It is however the 7.1 14.8
hours weeks
only region where the number
of payments sub-indicator 4.7 10.9
hours weeks
has increased following the
CIT
introduction of a tax that
40.3 164 11.8 88.80
cannot be paid and filed online. % hours payments DTF

Middle East The region performs worse

This continues to be the than the global average in all
easiest region in which to pay four components of the post-
taxes, with the lowest Total filing index.
Tax Rate and time to comply, VAT
19.1 30.3
and a number of payment sub- hours weeks

indicators below the global

17.0 26.9
average. These three sub- hours weeks
indicators remain unchanged CIT

from last year. 24.2 157 17.1 66.26

% hours payments DTF

10 Paying Taxes 2017

 The EU & EFTA region performs the best on the
new post-filing index, and South America has the
least efficient post-filing systems.

North America The region scores well on the

This region, with its three
economies, still has the lowest
payments sub-indicator
and the time to comply also
remains below the global
average. Despite a small
increase due to changes
in property and labour
post-filing index largely because
the case study company is
unlikely to be audited as a result
of the corporate income tax
correction in the United States.
VAT
13.8 23.5
hours weeks

taxes, the regions Total

13.2 23.9
Tax Rate remains below the hours weeks

globalaverage. CIT
39.0 197 8.2 70.73
% hours payments DTF

South America South America has the least

The region shows the greatest
reduction in the Total Tax
Rate and time to comply
since last year, but these sub-
indicators remain the highest
of any region. The Total Tax
Rate has fallen as the threshold
rates for a turnover tax changed.
The time to comply fell as the
introduction and improvement
efficient post-filing processes
of all regions, predominantly
because VAT refunds are not
available to the case study
company in any economy
and the corporate income tax
processes take longer than the
global average.
VAT
N/A N/A
hours weeks

of electronic systems across the 20.7 23.4

region took effect which also hours weeks
CIT
kept the payment sub-indicator
52.3 564 22.6 33.00
below the global average. % hours payments DTF

The regional picture 11

What this
publication covers

12 Paying Taxes 2017


This is the eleventh edition of Paying Taxes
incorporating up to 12 years worth of data
on tax systems in 190 economies around the
world.5 Paying Taxes is designed to measure the
ease of paying taxes and is part of the World
Bank Groups Doing Business project which
itself measures the ease of doing business by
looking at 11 indicators, including the Paying
Taxesindicator.
Paying Taxes remains a unique study, generating
an unparalleled dataset that assesses taxes from
the perspective of a tax paying business, based
upon a case study company. It reflects all taxes
and contributions that a standardised medium-
sized domestic company pays, including corporate
income taxes, employment taxes and mandatory
contributions, indirect taxes and a variety of
smaller payments such as municipal taxes. The
study facilitates a like-for-like comparison of
tax systems, stimulating a discussion between
business, government, civil society and a range
of other stakeholders regarding tax policy and its
economic impact.
This year, for the first time, the Paying Taxes study
includes a new sub-indicator the post-filing
index. Paying Taxes has historically measured
the Total Tax Rate of our case study company,
the time the company takes to comply with its
tax compliance obligations and the number of
tax payments it makes. This data now covers the
calendar years from 2004 to 2015 and provides
useful insights on how tax systems have adjusted
and developed over this period. These sub-
indicators however only measure the cost of
complying with tax obligations up until the filing
of tax returns and the payment of taxes due. Filing
the tax return with the tax authority does not,
however, imply agreement of the final tax liability.
Somalia has been included in Doing Business for the first time this year. As there is no relevant practice in Somalia for Paying
5
Taxes, it has been excluded from the Paying Taxes analysis which therefore covers 189 economies.
A unique study with 12 years
of tax data on 190 economies
around the world.
Post-filing processes such as claiming a
value-added tax (VAT) or goods and services
tax (GST) refund, undergoing a tax audit or
appealing a tax assessment can be the most
challenging interactions that a business has with
a tax authority and can vary markedly from one
jurisdiction to another. For that reason, we have
expanded the data for 2015 to include the post-
filing index. The new index is summarised below,
with further detail on the methodology being
provided in Appendix 1.
Including post-filing processes within the study
presented us with a number of challenges, one
of the most significant being that, unlike filing
and paying taxes, not all companies experience a
VAT or a corporate income tax (CIT) audit every
year. As our case study company is relatively
simple and, from the point of view of many tax
authorities, fairly low risk, it may be many years
before it undergoes a tax audit. We therefore
chose scenarios that could potentially trigger a
tax audit, but for each economy the World Bank
took the advice of the studys contributors as
to whether in practice the case study scenarios
were more likely than not to trigger an audit. We
recognise that the decision as to whether an audit
is likely or not for the given scenario is subjective,
binary and could have a considerable impact on
the results for each economy. We are however of
the view that the like-for-like comparisons which
this study is designed to facilitate can only be
made where the same scenarios are applied in all
economies. We would encourage readers of the
study to consider the underlying reasons for the
results in an economy, rather than focusing on
individual data points. Where audits are efficient
they may not have a significant adverse effect on
an economys overall Paying Taxes score.
What this publication covers 13
The objectives of the Paying
Taxesstudy
The objectives of the study are to:
compare domestic tax systems on a like-for-
like basis;
facilitate the benchmarking of tax systems
within relevant economic and geographical
groupings, which provides an opportunity to
learn from peer group economies;
analyse data and identify good tax practices
and reforms;
generate robust tax data on 190 economies
around the world, including how they have
changed over time, which then can be used to
inform tax policy decisions.6
The case study and data collection
process
Paying Taxes uses a case study company to
measure the ease of paying taxes by evaluating
the taxes and contributions paid by a medium-
sized company and the compliance burden
imposed by the tax system. The case study
scenario is based upon a standardised set of
financial statements with all items in the financial
statements calculated as a fixed multiple of gross
national income per capita (GNIpc) for each
economy. There are also standard assumptions
about transactions, employees, cross-border
transactions and ownership. The case study
company is not intended to be a representative
company, but has been constructed to facilitate a
comparison of the worlds tax systems on a like-
for-like basis.
Data is gathered through a questionnaire which
is completed by at least two tax specialists
(contributors) within each economy, including
PwC.7 The World Bank Group reviews and
compares the data from the different contributors
to reach a consensus view.
The four Paying Taxes sub-indicators
For Paying Taxes 2017, the contributors provided
information which allows the study to evaluate
both the cost of the taxes that are borne by the
case study company and the administrative
burden of taxes borne and collected using four
sub-indicators:
The results
Total Tax Rate is the measure of tax cost, the are generated
total of all taxes borne as a percentage of using four sub-
commercial profit;8
indicators
the time to comply with the three main taxes
(corporate income taxes, labour taxes and
mandatory contributions, and consumption
taxes); this captures the time required to
prepare, file and pay each tax type;
the number of payments, which measures
the frequency with which the company has
to file and pay different types of taxes and
contributions, adjusted for the manner in
which those filings and payments are made;9
post-filing index, based on four equally
weighted components:
1. Time to comply with a VAT refund (hours),
2. Time to obtain a VAT refund (weeks),
3. Time to comply with a CIT audit (hours),
4. Time to complete a CIT audit (weeks).
A distance to frontier score is calculated for each
of the four sub-indicators. The simple average of
these four scores then gives the overall Paying
Taxes distance to frontier.10
The case study also looks at the structure of a
first level administrative appeal process. The data
regarding this process is however not included
in the distance to frontier score for Paying Taxes,
although a summary of the findings is included in
Chapter 1: World Bank Group Commentary.

6
As there is no relevant practice in Somalia for Paying Taxes, it has been excluded from the Paying Taxes analysis which therefore covers 189 economies.
7
For a list of all the contributors see www.doingbusiness.org/contributors/doing-business
8
Commercial profit is essentially net profit before all taxes borne. It differs from the conventional profit before tax, reported in financial statements. In
computing profit before tax, many of the taxes borne by a company are deductible. Commercial profit is calculated as sales minus cost of goods sold, minus
gross salaries, minus administrative expenses, minus other expenses, minus provisions, plus capital gains (from the property sale), minus interest expense,
plus interest income and minus commercial depreciation. To compute the commercial depreciation, a straight-line depreciation method is applied, with the
following rates: 0% for the land, 5% for the building, 10% for the machinery, 33% for the computers, 20% for the office equipment, 20% for the truck and 10%
for business development expenses. Commercial profit amounts to 59.4 times GNIpc in each economy, by assumption of the case study company.
9
Where full electronic filing and payment is used by the majority of medium-size businesses in the economy and where there is no requirement to file hard
copies of documentation following electronic submission, the number of payments is counted as one even if filings and payments are more frequent.
10
See page 16 for an explanation of the distance to frontier score.

14 Paying Taxes 2017

The post-filing index
The post-filing index is based on distance to
frontier scores (see below) of 0-100 where 0
represents the least efficient process and 100
the most efficient. The index looks at two post-
filing processes; claiming a VAT (or GST) refund
and correcting a CIT return. Both processes
may involve a tax audit. For each process there
are two components giving the following four
components in total:
1. Time to comply with a VAT (or GST) refund
(hours). The time the company spends
claiming a VAT (or GST) refund. If the refund
is likely to trigger an audit, this also includes
the time spent gathering and submitting
information required by the tax authority as
part of the audit.
2. Time to obtain a VAT (or GST) refund
(weeks). The time that elapses between the
submission of a VAT refund claim and either
the receipt of the refund (plus an average
waiting time before the refund can be
submitted) or the time the audit, if applicable,
is completed, iflater.
3. Time to comply with a CIT audit (hours).
The time the company spends correcting an
error on the CIT return. If the correction is
likely to trigger an audit, this also includes
the time spent gathering and submitting
information required by the tax authority
as part of the audit. Where the correction
is unlikely to trigger an audit, only the time
needed to correct the error and make the
additional payment of the balance due
is included.
4. Time to complete a CIT audit (weeks). The
time that elapses between the start of an audit
process and its completion. If the correction is
thought unlikely to trigger an audit, the time
will be nil.
Each of the four components is converted to
a distance to frontier score of 0-100 where 0
represents the least efficient process and 100 the
most efficient. If both VAT and CIT apply, the post-
filing index is the simple average of the distance
to frontier scores for each of the four components.
If an economy has no VAT or CIT system, then the
relevant components are ignored and the distance
to frontier scores of the remaining components
are averaged to give the post-filing index. If an
economy has neither VAT nor CIT, then the post-
filing index is ignored in determining the overall
Paying Taxes distance to frontier score.
If a VAT (or GST) refund system does not exist in
an economy, or is not available to the case study
company, then the distance to frontier scores
of the VAT components are each given a score
of 0, being equal to the least efficient process.
As explained in Chapter 1, an efficient refund
system is a necessary element of a VAT system
if the principle that the tax should be paid by
consumers, but neutral for companies, is to be
fully applied in practice.
Throughout this publication, the post-filing index
and its components have been represented as
shown in Figure 1 with the central number being
the post-filing index score and the four underlying
components included as shown.

Figure 1
Representing the post-filing index

Time to comply with a VAT audit Time to obtain a VAT refund

The time spent claiming a VAT (or GST) refund. The time that elapses between the submission
If the refund is likely to trigger an audit, this nd of a VAT refund claim and either the receipt of
refu Tim
et
also includes the time spent gathering and VAT oo the refund (plus an average waiting time
a bt
submitting information required by the tax ith 2 1.6 before the refund can be submitted) or the
rs
ain
w

authority as part of the audit.

ou time the audit, if applicable, is completed,
ly

aV
mp

if later.
we
h

AT
co

.2

refu
ek
to

14

The overall post-ling index

Time

s
nd

distance to frontier score is a simple

average of the distance to frontier
scores for the components of the 61.24
Post-ling
index. The score ranges from 0-100 index score
where 0 is the least efcient process
and 100 the most efcient.
Tim

t
udi
16 ply
e

ks
to

a
.7

ee

IT

ou
c

Time to comply with a CIT audit Time to complete a CIT audit

aC
om

rs 3
The time spent correcting an error on the w
17. The time that elapses between the start
e

pl
et

ith
CIT return. If the correction is likely to trigger aC m of an audit process and its completion.
IT co
an audit, this also includes the time spent aud e to Where the gure is an average, it includes
it Tim
gathering and submitting information required the time only for those economies where an
by the tax authority as part of the audit. audit is likely to occur.

What this publication covers 15

The distance to frontier scores
The sub-indicators are converted to distance to
frontier (DTF) scores in order to calculate the
ease of paying taxes. The distance to frontier
score benchmarks the four sub-indicators (Total
Tax Rate, time to comply, number of payments
and post-filing index) to a measure of regulatory
best practice showing the gap between each
economys performance and the best practice for
each sub-indicator. Details of how the DTF score
is calculated are provided in Appendix 1. This is
done in isolation, without considering the macro
economy as a whole, but rather only the micro
impact on a single business.
Important points on the
methodology
The full methodology of the study for the case
study company, the sub-indicators, and some
examples of how the sub-indicators are calculated
are included in Appendix 1. Some important
points to note however are that:
1. The sub-indicators are calculated by reference
to a particular calendar year. The effect of
any change that takes place part way through
the year is pro-rated. The most recent data in
this study, Paying Taxes 2017, relates to the
calendar year ended 31 December 2015.
2. For 2004 to 2011, the GNIpc figures used to
construct the case study financial statements
were based on 2005 values. For 2012 to 2015,
the 2012 GNIpc values have been used. This
has been done to ensure that the case study
company reflects the economic growth that
has been experienced over the period of the
study, but means that care needs to be taken in
the interpretation of some of the trends.
16 Paying Taxes 2017
3. The ranking order is based on the DTF
measure which is used by the World
Bank Group to evaluate each economys
performance relative to the lowest and highest
value of each sub-indicator rather than
relative to the other economies. This means
that economies can now see how far they have
progressed towards best practice, rather than
simply looking at how they compare to other
economies. The distribution used to determine
the distance to frontier score of the Total Tax
Rate is non-linear. This means that movements
in a Total Tax Rate that is already close to
the lowest Total Tax Rate will have less of an
impact on the DTF score. As in previous years,
the lowest Total Tax Rate for the purposes
of the ranking calculation is set at the 15th
percentile of the overall distribution for all
years included in the analysis up to Doing
Business 2017, which is 26.1%. Economies
with a Total Tax Rate below this value will
therefore not be closer to the frontier than
an economy with a Total Tax Rate equal to
thisvalue.
4. In Table 9 in Appendix 3 we list the overall
Paying Taxes distance to frontier score which
includes the new post-filing index score. We
have also included, for ease of comparison,
the Paying Taxes distance to frontier score
and ranking based purely on the original
three indicators. From this table, it can be
seen whether the inclusion of the post-filing
index moves an economy closer to or further
away from the frontier, Care should be taken
however in comparing the impact of the
post-filing index between economies as some
economies do not have a VAT and/or a CIT
system as shown in Table13 and therefore
will not be scored on all the components of the
post-filing index.
5. If in the course of collecting and analysing the
data for 2015 it became apparent that data for
previous years was incorrect, the necessary
adjustments have been made and the sub-
indicators recalculated for prior years. Any
data that refers to 2014 and earlier years is
therefore stated after such corrections have
been made and so may differ from the data
published in previous editions of this study
including the global and regional averages.
Contents of the publication
Chapter 1 of this years publication is the World
Bank Groups commentary on the background to
the inclusion of the post-filing index in the study
and provides overview of the results for the post-
filingindex.
Chapter 2 provides PwCs analysis and
commentary with a focus on the results for the
current year across all four sub-indicators. We
begin by looking at the global results for the year
ending 31 December 2015. We then analyse the
data points on the regions and how they compare
with each other.
Chapter 3 provides country articles from PwC
tax partners and staff in our regional launch
locations; Costa Rica, Cte dIvoire, Ecuador,
Hungary and Indonesia.
Chapter 4 includes two views on different aspects
of global tax policy and administration:
Amal Lahrlid and Simon Carey of PwCs
Global Fiscal Policy Advisory team looks
at corporate social responsibility and
asks whether there is a role for corporates
in assisting with tax policy and tax
administration capability.
Jo Bello, PwCs Global Indirect Tax Leader
and Haider Hatteea, discuss trends in VAT, the
increasing importance of VAT for government
revenues, and an analysis of the way VAT
compliance has an impact around the world.
Appendix 1 details the methodology of the study
explaining the parameters of the case study
company, what the sub-indicators measure (with
examples) and explains how the raw data is
converted into a distance to frontier score.
Appendix 2 and Appendix 3 contain this years
data for each economy, including the four sub-
indicators, distance to frontier score, and the
rankings, along with a breakdown by region.
Further details are available on the PwC and
World Bank Group websites.
Explore the full data sets online
at www.pwc.com/payingtaxes
and www.doingbusiness.org
What this publication covers 17
Chapter 1 World Bank
Group commentary

18 Paying Taxes 2017. World Bank Group commentary

Executive summary
Up until Doing Business 2016, the Paying Taxes
indicator measured the cost of complying with
tax obligations up to the filing of tax returns
and the payment of taxes due. Filing the return
with the tax authority, however, does not imply
agreement with the final tax liability. Post-filing
processes such as claiming a value-added
tax (VAT) refund, undergoing a tax audit or
appealing a tax assessment can be the most
challenging interactions that a business has with
a tax authority. Doing Business 2017 expands
the Paying Taxes sub-indicators to include a new
measure on post-filing.
Doing Business data shows that OECD high-
income economies process VAT refunds the
most efficiently with an average of 14.4 weeks to
reimburse the VAT refund. Economies in Europe
and Central Asia also perform well with an
average refund time of 16 weeks.
11
Comprehensive audits are those which are more extensive than limited scope audits or single issue audits.
On average, businesses spend six hours correcting
an error in an income tax return and preparing
any additional documents, submitting the files
and making additional payment. Even following
immediate voluntary notification by the taxpayer,
in 74 economies an error in the income tax return
is likely to trigger an audit. In 38 economies this
error will lead to a comprehensive audit of the
taxreturn.11
OECD high-income economies as well as Europe
and Central Asia economies have the easiest and
simplest processes in place to correct a minor
mistake in the corporate income tax return.
An internal administrative review process should
be based on a transparent legal framework.
This process should be independent and resolve
disputes in a timely manner.
19
Why does Paying Taxes include a
post-filing index?
Taxes are important to the proper functioning
of an economy. They are the main source of
federal, state and local government revenues
used to fund health care, education, public
transport, unemployment benefits and pensions,
among others. While the size of the tax cost
imposed on businesses has implications for their
ability to invest and grow, the efficiency of the
tax administration system is also critical for
businesses.12A low cost of tax compliance and
efficient tax-related procedures are advantageous
for firms. Overly complicated tax systems are
associated with high levels of tax evasion, large
informal sectors, more corruption and less
investment.13 Tax compliance systems should be
designed so as not to discourage businesses from
participating in the formal economy.
Modern tax systems seek to optimise tax
collections while minimising administrative
and taxpayer compliance costs. The most cost-
effective tax collection systems are those that
encourage the vast majority of taxpayers to
meet their tax obligations voluntarily, thereby
allowing tax officials to concentrate their efforts
on non-compliant taxpayers and other services
provided by tax administrations.14 Taxpayers
are more likely to comply voluntarily when a tax
administration has established a transparent
system that is regarded by taxpayers as being
honest and fair.
12
For more on the World Bank Enterprise Surveys, see the website at http://www.enterprisesurveys.org.
Djankov, Simeon, Tim Ganser, Caralee McLiesh, Rita Ramalho and Andrei Shleifer. 2010. The Effect of Corporate Taxes on Investment and
13 
Entrepreneurship. American Economic Journal: Macroeconomics 2 (3): 31-64.
14
IMF (International Monetary Fund). 2015a. Current Challenges in Revenue Mobilization: Improving Tax Compliance. IMF Staff Report. IMF: Washington DC.
20 Paying Taxes 2017. World Bank Group commentary
Total tax compliance costs include all major
transactions that generate external costs to Taxpayers are
the taxpayer. Up until Doing Business 2016, the
more likely
Paying Taxes indicator set measured only the
to comply
cost of complying with tax obligations up until
the filing of tax returns and the payment of taxes
voluntarily
due. However, filing the tax return with the tax when a tax
authority does not imply agreement with the administration
final tax liability. Post-filing processes such as has established
claiming a value-added tax refund, undergoing a a transparent
tax audit or appealing a tax assessment can be system that is
the most challenging interactions that a business regarded by
has with a tax authority. taxpayers as
being honest
Doing Business 2017 expands the Paying Taxes and fair.
indicators to include a new measure of the time
businesses spend complying with two post-filing
processes: claiming a VAT refund and correcting
a mistake in the corporate income tax return.
This case study examines these two post-filing
procedures across 190 economies and shows
where post-filing processes and practices work
efficiently and what drives the differences in the
overall tax compliance cost across economies.
This case study also includes a section on the
structure of a first level administrative appeal
process. The data on first level administrative
appeal process is not included in the distance to
frontier score for Paying Taxes.
Why does the post-filing index look at
VAT refunds?
The VAT refund is an integral component of a
modern VAT system. A discussion of the types
of consumption tax systems is available in
Chapter4. In principle, the statutory incidence of
VAT is on the final consumer, not on businesses.
According to tax policy guidelines set out by the
Organisation for Economic Co-operation and
Development (OECD) a value-added tax system
should be neutral and efficient.15 Some businesses
will incur more VAT on their purchases than
they collect on their taxable sales in a given tax
period and therefore should be entitled to claim
the difference from the tax authorities. When
businesses incur VAT which is not refunded at all
or reclaimed with delays and large compliance
costs then the principles of neutrality and
efficiency are undermined. This alters the
nature of VAT by effectively making it a tax on
production. Any tax that cannot be recovered by
the business could have a distortionary effect on
market prices and competition and consequently
constrain economic growth.16
Refund processes can be a major weakness of
VAT systems. This was the finding of a study
that examined the VAT administration refund
mechanism in 36 economies around the world.17
Even in economies where refund procedures are
in place, businesses often find the complexity
of the process challenging. The study examined
the tax authorities treatment of excess VAT
credits, the size of refund claims, the procedures
followed by refund claimants and the time
needed for the tax authorities to process refunds.
The results showed that statutory time limits for
making refunds are crucial but often not applied
inpractice.
Most VAT systems allow credit to be carried-
forward for a specific period of time and offset
against future net liabilities to reduce the number
of refunds processed. The rationale is that excess
VAT credits in one tax period would be followed
by periods when net liabilities would absorb the
credit brought forward, especially for businesses
producing and selling in the domestic market. A
refund is paid only if an amount of excess credit
remains to be recovered by the taxpayer at the
end of the carry-forward period. Some systems
also allow a VAT credit in a given tax period to be
offset against other current tax liabilities such as
income tax. While the option of carry-forward is
allowed in most VAT systems, it is good practice
for economies to put in place an adequate VAT
refund system. Because considerable differences
in the efficiency of processing VAT cash refunds
exist between economies, the Paying Taxes
indicators focus on assessing VAT refund systems.
The International Monetary Funds (IMF) Tax
Administration Diagnostic Assessment Tool
(TADAT) provides an integrated monitoring
framework to measure the performance of an
economys tax administration system across
different functions, including the adequacy of its
VAT refund system. It does this by measuring the
time taken to pay (or offset)refunds.18
Like any tax, VAT is prone to fraud and its refund
mechanism may be open to abuse by taxpayers.19
Delays in processing refunds, therefore, may
be the result of concerns over potential fraud.
Even when claims reach the finance division
responsible for approving them and making
payment, there can be delays in transmission.
Additional procedural checks at this stage
prompted by a fear of the system being abused
are common.

In some economies a claim for a VAT refund can

automatically trigger a costly audit, undermining
the overall effectiveness of the system.20 Effective
audit programs and VAT refund payment systems
are inextricably linked. Tax audits (direct and
indirect) vary in their scope and complexity,
ranging from a full audit which typically entails
a comprehensive examination of all information
relevant to the calculation of a taxpayers tax
liability in a given period to a limited scope
audit that is restricted to specific issues on the
tax return or a single issue audit that is limited to
oneitem.21

15,16
 ECD (Organisation for Economic Co-operation and Development). 2014. International VAT/GST Guidelines. Global Forum on VAT. 17-18 April. OECD,
O
Paris. Available at: http://drtp.ca/wp-content/uploads/2015/09/oecd-international-vat-gst-guidelines.pdf.
Harrison, Graham and Russell Krelove. 2005. VAT Refunds: A Review of Country Experience, IMF Working Paper 05/218, International Monetary Fund,
17 

Washington, DC..
18
For more information on the Tax Administration Diagnostic Assessment Tool (TADAT), see the website at http://www.tadat.org/.
Keen, Michael, and Stephen Smith. 2007. VAT Fraud and Evasion: What Do We Know, and What Can Be Done? IMF Working Paper 07/31, International
19 

Monetary Fund, Washington, DC.

Harrison, Graham and Russell Krelove. 2005. VAT Refunds: A Review of Country Experience, IMF Working Paper 05/218, International Monetary Fund,
20 

Washington, DC.
OECD (Organisation for Economic Co-operation and Development). 2006. Strengthening Tax Audit Capabilities: General Principles and Approaches. OECD,
21 

Center for Tax Policy and Administration, Paris, France: OECD.

21
The VAT refund scenario for Paying Taxes
The transactions that lead to substantial VAT
refund claims typically include exports, capital
expenses, extraordinary losses and start-up
operations.22 Through its Paying Taxes indicators,
Doing Business measures the efficiency of VAT
refunds by analysing the case of capital expenses.
The Doing Business case study company,
TaxpayerCo, is a domestic business that does
not participate in foreign trade. It performs a
general industrial and commercial activity in
the domestic market and is in its second year of
operation. TaxpayerCo. meets the VAT threshold
for registration and its monthly sales and
operating expenses are fixed throughout the year
resulting in a positive output VAT payable to the
tax authorities within each accounting period.
The case study scenario has been expanded
to include a capital purchase of a machine in
the month of June; this substantial capital
expenditure results in input VAT exceeding
output VAT in the month of June.
Availability of VAT refunds to TaxpayerCo.
In principle, when input VAT exceeds output
VAT the amount should be paid as a refund to
a registered business within the time period
stipulated in the legislation. In practice, however,
only 93 of the economies covered by Doing
Business allow for a VAT cash refund in this
scenario, as shown in Figure 2. Some economies
restrict the right to receive an immediate
cash refund to specific types of taxpayers
such as exporters, embassies and non-profit
organisations.
This is the case in 43 economies including
Belarus, Bolivia, Colombia, the Dominican Some economies
Republic, Ecuador, Kazakhstan, Kenya, Mali restrict the
and the Philippines. In Ecuador, VAT refunds right to receive
are limited to exporters, embassies, diplomatic an immediate
missions, some specific non- government entities
cash refund to
and international cargo companies. In Armenia,
specific types of
cash refunds are only allowed when zero-rated
VAT transactions (primarily exports) exceed 20%
taxpayers.
of all transactions.
In some
In some economies businesses are only allowed to economies
claim a cash refund after rolling over the excess businesses are
credit for a specified period of time (for example, only allowed
four months). The net VAT balance is refunded to claim a cash
to the business only when this period ends. This refund after
is the case in 21 economies included in Doing rolling over the
Business.23 In Albania, Azerbaijan, Cambodia, excess credit
The Gambia, Lesotho, Malawi and St. Lucia,
for a specified
businesses must carry forward the excess input
period of time.
VAT for three months before a cash refund can be
given. In other economies typically those with
a weaker administrative or financial capacity to
handle cash refunds the legislation may not
permit refunds outright. Instead, tax authorities
require businesses to carry forward the claim and
offset the excess amount against future output
VAT. This is the case in Grenada, Guinea-Bissau,
Sudan and Repblica Bolivariana de Venezuela.
In these two groups of economies it is common
to make exceptions for exporters in relation to
domestic supply. Twenty-eight economies do not
levy VAT.
64

Figure 2
Availability of VAT refunds to TaxpayerCo (number of economies)

5 No VAT refund practice (economy not scored)

28 No VAT system

VAT refund not available to case study company due to:

Cash refund available
Refund restricted to to Taxpayer Co. 93
42 certain companies*

Mandatory carry forward

12 period of more than 4 months 64
10 VAT refund not available to case study
company for other reason

Note: In Taiwan, China a refund is available to the case study company even though there are restrictions as to the type of company that can claim a refund.
Source: Doing Business database

The key point for exports is that the supplies are taxable but zero-rated as they are taxed at the destination economy leading to input VAT being offset
22 

against zero output VAT. The notion of claiming a VAT refund immediately for substantial capital expenditure in an accounting period is that the recoverable
amount of input VAT in that period could be large and result in excess input tax credit or a refund claim for the period. Extraordinary events such as fire,
flood or seasonal trends may lower sales activities over periods of time or even halt sales while the business continues filing regular VAT returns. Lastly, new
businesses would register for VAT based on the sales that they expect to make even before they start making actual sales. This means that new businesses
could offset input VAT on start-up expenses against a minimal output VAT resulting in a VAT refund claim.
These economies are Albania; Antigua and Barbuda; Azerbaijan; Bulgaria; Cambodia; Dominica; The Gambia; Guyana; Jordan; Kiribati; Lesotho; Malawi;
23 

Nepal; Pakistan; Seychelles; St. Kitts and Nevis; St. Lucia; Tanzania; Tonga; Tunisia; and Vietnam.

22 Paying Taxes 2017. World Bank Group commentary

Complying with a VAT cash refund
In 68 of the 93 economies that allow for VAT cash
refunds (as in the Doing Business case scenario)
the legal framework includes a time limit to
repay the VAT refund starting from the moment
the refund was requested. As shown in Figure 3,
these time limits are always applied in practice
in only 29 economies (21 of these economies
are high-income economies). In only 28 of the
93 economies, a claim for a VAT refund does not
ordinarily lead to an audit being conducted.24
In 46 economies the VAT refund due is calculated
and requested within the standard VAT return,
which is submitted for each accounting period
and without additional work. The main purpose
of filing a VAT return is to provide a summary
of the output and input VAT activities that
result in the net VAT payable or due (as credit
or refund). For these economies the compliance
time to prepare and request a VAT refund is
minimal because it simply requires ticking a box.
Twenty-one of these economies are OECD high-
income economies. Furthermore eight of the 14
economies where taxpayers will not face an audit
and therefore will not spend additional time
complying with the requirements of the auditor
are OECD high-income economies. This partly
explains the average low compliance time in the
region (Figure 4).
Figure 3
Legal time limits where VAT cash refunds are available
(number of economies)
25 39
No legal Time limit which
time limit is not applied in
practice
29
Time limit which
is applied in
practice
Source: Doing Business database
These economies are Austria; Barbados; Belize; Costa Rica; Croatia; Cyprus; Ethiopia; Finland; France; Germany; the Islamic Republic of Iran; Ireland;
24 
the Republic of Korea; Latvia; Lithuania; Malta; Netherlands; New Zealand; Papua New Guinea; Portugal; Samoa; Seychelles; Slovenia; Spain; Sweden;
Switzerland; Taiwan, China; and the Republic of Yemen.
In Germany, the Republic of Korea and the
46
Netherlands, taxpayers request a VAT refund by
simply ticking a box on the standard VAT return.
Taxpayers do not need to submit any additional
documents to substantiate the claim and it is In 46 economies
unlikely that this specific case study scenario of a the VAT refund
domestic capital purchase would trigger an audit. due is calculated
In all three economies, the standard VAT return is and requested
submitted electronically. within the
standard VAT
However, some economies require businesses
return.
to file a separate application, letter or form for
a VAT refund or to complete a specific section
in the VAT return as well as to prepare some
additional documentation to substantiate the
claim (for example, the contract with the supplier
28
of the machine). This is the case in Azerbaijan, In only 28 of the
Bangladesh, Costa Rica, Cyprus, Mexico, Senegal, 93 economies
St. Lucia and Sweden, among others. In these where a VAT
economies businesses spend on average 5.2 hours refund is
gathering the required information, calculating available, does
the claim and preparing the refund application a claim for a
and other documentation before submitting them VAT refund not
to the relevant authority. ordinarily lead
to an audit being
The requirements in these cases vary from simply
conducted.
completing a specific section of the standard VAT
return to submitting a specific refund application.
In Switzerland, for example, taxpayers would
need to complete a section of the VAT return. It
takes taxpayers in Switzerland 1.5 hours to gather
the necessary information from internal sources
and to complete the relevant section. The VAT
return is submitted electronically. In Moldova,
however, taxpayers must submit a specific VAT
refund form and it is highly likely that a field
audit would be triggered by the refund request.
64
Figure 4
Complying with VAT refund processes is most challenging in Latin America and
the Caribbean, followed closely by Sub-Saharan Africa
Latin America & the Caribbean 19.6 hours
Sub-Saharan Africa 19.5 hours
East Asia & Pacific 18.7 hours
Middle East & North Africa 13.4 hours
Europe & Central Asia 11.9 hours
OECD high income 7.6 hours
Source: Doing Business database
Note: South Asia is not included in the figure because VAT refunds are only available in one
economy (Bangladesh)
23
Completing a VAT refund process
A request for a VAT cash refund is likely to trigger
an audit in 65 economies covered by Doing
Business. As a general rule the refunds are paid
upon completion of the audit and not at the end of
the statutory period. This adds time and costs for
businesses to comply with auditor requests and
the payment of the cash refund is further delayed.
Businesses in these economies spend on average
14.7 hours complying with the requirements of
The OECD high-income economies process VAT
refunds most efficiently with an average of
14.4 weeks to reimburse a VAT refund (including
some economies where an audit is likely to be
65
conducted). Economies in Europe and Central A request for a
Asia also perform well with an average refund VAT cash refund
processing time of 16 weeks (Figure 6). This is likely to
implies that those economies provide refunds in a trigger an audit
manner that is less likely to expose businesses to in 65 economies.
unnecessary administrative costs and detrimental

7
the auditor in terms of document preparation, cash flow impacts.
engage in several rounds of interactions with
the auditor that last on average 7.9 weeks and From the moment a taxpayer submits a VAT
wait an additional 5.6 weeks until the final audit refund request in Austria, it takes only one week Businesses
decision is made. As shown in Figure 5, of the for the tax authority to issue a refund. And it is subjected to
65 economies, businesses are likely to undergo unlikely that the request would trigger an audit. a field audit
a field audit in 34, a correspondence audit in 22 The refund is processed electronically through would spend
and an office audit in nine. Businesses subjected online banking. In Estonia, despite the fact that on average
to a field audit would spend on average an the claim for a VAT refund per the case scenario
an additional
additional 7 hours complying with the auditors is highly likely to trigger a correspondence
7 hours
requirements compared to businesses subjected to audit, the process is efficient. The VAT refund is
a correspondence audit. reimbursed in 1.7 weeks on average assuming the complying with
refund is approved. This includes the time spent the auditors
In Canada, Denmark, Estonia and Norway the by the taxpayer engaging with the auditor and requirements
request for a VAT refund is likely to trigger the time waiting until the final tax assessment compared to
a correspondence audit, which requires less isissued. businesses
interaction with the auditor and less paperwork. subjected to a
By contrast, in most of the economies in Sub- correspondence
Saharan Africa where an audit is likely to take audit.
place, taxpayers are exposed to a field audit
in which the auditor visits the premises of the
taxpayer. This is the case in Botswana, The
Gambia, Malawi, Niger, Zambia and Zimbabwe.

64
Figure 5 Figure 6
Types of audit triggered by a VAT refund (number of Time to obtain VAT refund (weeks) the process of obtaining a VAT refund is
economies) most efficient in OECD high-income economies

Latin America & the Caribbean 35.0 weeks

9 34 Middle East & North Africa 28.8 weeks

Office audit Field audit Sub-Saharan Africa 27.5 weeks

East Asia & Pacific 24.9 weeks
Europe & Central Asia 16.0 weeks
OECD high income 14.4 weeks
22
Correspondence
audit Source: Doing Business database
Note: South Asia is not included in the figure because VAT refunds are only available in one
economy (Bangladesh)

28
Audit unlikely

Source: Doing Business database

24 Paying Taxes 2017. World Bank Group commentary

The experience in economies in other regions
is less favourable. Obtaining a VAT refund in
Latin America & the Caribbean takes on average
35 weeks. In the Middle East & North Africa
and Sub-Saharan Africa it takes on average
28.8 and 27.5 weeks, respectively, to obtain a
VAT refund. The sample for Latin America &
the Caribbean includes only nine economies
(the other economies do not allow for VAT cash
refund per the case study scenario). The Middle
East & North Africa sample consists of only six
economies as most economies in the region do
not levy any type of consumption tax. However,
in Sub-Saharan Africa the story is different: the
refund waiting time is longer because in most of
the economies in the region where cash refund is
allowed, taxpayers are likely to be audited before
the refund is approved.
Why are some refund processes more
efficient?
The efficiency of the VAT refund process
in OECD high-income economies is partly
attributable to the commitment of all OECD
members to apply the OECD International VAT
Guidelines.25 Furthermore, the binding nature
of the 2010 European Union (EU) Directives on
VAT implementation ensures that refunds are
processed fully and efficiently.
direct crediting of VAT refunds). VAT refunds are
paid electronically in only 30 economies covered
by Doing Business. Delays in VAT refund payments
may arise if, for example, the finance division that
30
VAT refunds
is tasked with checking and approving the claim
are paid
is forced to make additional procedural checks to
guard against fraud before payment is made.26 electronically
in only 30
Laws provide for interest to be paid on late VAT economies.
refunds by the tax authorities in 70 economies
covered by Doing Business. However, the payment In economies
of interest is always applied in practice in only with tax systems
32 economies. The prescribed interest period that are more
typically begins when the tax authority fails difficult to
to refund VAT within the prescribed statutory comply with
deadlines. when filing
taxes, the entire
There is a positive correlation between the time
process is more
to comply with a VAT refund process and the time
to comply with filing the standard VAT return likely to be
and payment of VAT liabilities (Figure 7). This challenging.
suggests that spending time up front to comply
with the requirements of the tax system does not
necessarily translate into an easier time post-
filing. Indeed, in economies with tax systems
that are more difficult to comply with when filing
taxes, the entire process is more likely to be
challenging.

A major determinant of the ability of revenue

authorities to provide good standards of service
for the repayment of VAT refund claims is the
availability and use of modern electronic services
(such as electronic filing, pre-population and

Figure 7
Economies with complex VAT post-filing processes also tend to have high compliance times for VAT pre-filing

Pre-filing compliance time (hours) Post-filing compliance time (hours)

350 24

300 21

250 18

200 15

150 12

100 9

50 6

0 3
Most difficult Easiest
Economies sorted by time for filing and paying VAT (quintiles)

Source: Doing Business database

OECD (Organisation for Economic Co-operation and Development). 2014. International VAT/GST Guidelines. Global Forum on VAT. 17-18 April. OECD, Paris.
25 

Available at: http://drtp.ca/wp-content/uploads/2015/09/oecd-international-vat-gst-guidelines.pdf.

Child, David. 2008. VAT Administration: Addressing Private Sector Concerns. In VAT in Africa, edited by Richard Krever. Pretoria: Pretoria University Law
26 

Press.

25
Why does the post-filing index The CIT audit scenario for Paying Taxes
include corporate income tax audits?
A tax audit is one of the most sensitive
interactions between a taxpayer and a tax
To analyse audits of direct taxes, a supplementary
Doing Business case study scenario was created to
assume that TaxpayerCo. made a simple error in
6
On average,
authority. Although tax audits have a role in the calculation of its income tax liability, leading
businesses
ensuring tax compliance, they impose a burden to an incorrect corporate income tax return and
on the taxpayer to a greater or lesser extent consequently an underpayment of income tax spend six hours
depending on the number and type of interactions liability due. TaxpayerCo. discovered the error preparing
(field visit by the auditor or office visit by the and voluntarily notified the tax authority. the amended
taxpayer) and the level of documentation return and
requested by the auditor. It is therefore essential Correcting a CIT return and complying any additional
that the right legal framework is in place to ensure with an audit documents,
integrity in the way tax authorities carry out In all economies that levy corporate income tax submitting the
audits.27 Additionally, an audit must have defined only 10 out of 190 do not taxpayers can notify files and making
start and end points and the taxpayer must be the authorities of the error, submit an amended payment.
notified once the audit process is completed. return and any additional documentation
(typically a letter explaining the error and, in
A risk-based approach takes into consideration
different aspects of a business such as historical
compliance, industry characteristics, debt-
some cases, amended financial statements) and
pay the difference immediately. On average,
businesses spend six hours preparing the
24.7
On average
credit ratios for VAT-registered businesses amended return and any additional documents,
taxpayers will
and firm size. Characteristics of firms are also submitting the files and making payment.
used to better assess which businesses are spend 24.7 hours
most prone to tax evasion. One study showed In 74 economies even following immediate complying with
that data-mining techniques for auditing, notification by the taxpayer the error in the the requirements
regardless of the technique, captured more income tax return is likely to trigger an audit. of the auditor,
noncompliant taxpayers than random audits.28 On average taxpayers will spend 24.7 hours spend 10.6
In a risk-based approach the exact criteria complying with the requirements of the auditor, weeks going
used to capture noncompliant firms, however, spend 10.6 weeks going through several rounds of through several
should be concealed to prevent taxpayers from interactions with the auditor and wait 6.7 weeks rounds of
purposefully planning how to avoid detection for the auditor to issue the final decision on the interactions
and to allow for a degree of uncertainty to drive tax assessment. with the auditor
voluntary compliance.29 Most economies have risk
and wait 6.7
assessment systems in place to select companies
weeks.
for tax audits and the basis on which these
companies are selected is not disclosed. Despite
being a post-filing procedure, audit strategies set
by tax authorities can have a fundamental impact
on the way businesses file and pay taxes.

OECD (Organisation for Economic Co-operation and Development). 2006. Strengthening Tax Audit Capabilities: General Principles and Approaches. OECD,
27 

Center for Tax Policy and Administration, Paris, France: OECD.

Gupta, M., and V. Nagadevara. 2007. Audit Selection Strategy for Improving Tax ComplianceApplication of Data Mining Techniques. In Foundations of
28 

E-government, edited by A. Agarwal and V. Venkata Ramana. Hyderabad, India: Computer Society of India.
Alm, James and Michael McKee. 2006. Audit Certainty, Audit Productivity, and Taxpayer Compliance. Andrew Young School of Policy Studies Research
29 

Paper 2006-43. Available at Social Science Research Network (SSRN). http://ssrn.com/abstract=897341. Khwaja, Munawer Sultan, Rajul Awasthi and Jan
Loeprick. 2011. Risk-Based Tax Audits: Approaches and Country Experiences. Washington DC: World Bank

26 Paying Taxes 2017. World Bank Group commentary

In 38 economies this error will lead to a
comprehensive audit of the income tax return,
requiring that additional time be spent by
businesses. And in the majority of cases the
auditor will visit the taxpayers premises. OECD
high-income economies as well as Europe &
Central Asia economies have the easiest and
simplest processes in place to correct a minor
mistake in the income tax return (Figure8).
A mistake in the income tax return does not
automatically trigger an audit by the tax
authorities in 25 OECD high-income economies.
Taxpayers need only to submit an amended return
and, in some cases, additional documentation
and pay the difference in balance of tax due. In
Latin America & the Caribbean taxpayers suffer
the most from a lengthy process to correct a
minor mistake in an income tax return. In most
cases this process will involve an audit imposing
a waiting time on taxpayers until the final
assessment is issued (Figure 9).
In Portugal and Estonia, taxpayers must only
submit an amended tax return and make the
necessary payment at the moment of submission.
It takes taxpayers half an hour to prepare the
amended return and another half an hour to
submit it electronically. The payment is also
made online. In these economies, the case study
38
In 38 economies
scenario of a minor mistake in the income tax
the corporate
return is not likely to trigger an audit. In New
Zealand, taxpayers must submit a specific income tax error
voluntary disclosure form which takes on will lead to a
average three hours to prepare with comprehensive
the submission and payment being made audit of
electronically. Similarly, taxpayers are unlikely the income
to be exposed to an audit in the case measured in tax return,
Doing Business. requiring that
additional time
In Brazil, Honduras, Nicaragua and Peru the be spent by
fact that taxpayers erroneously declared and businesses.
underpaid their income tax liability would likely
trigger a field audit by the tax authorities. In Peru
taxpayers will undergo a comprehensive audit
of all items on the income tax return, requiring
interaction with the auditor for around six weeks
and waiting an additional seven weeks for the
auditor to issue the final assessment.

Figure 8
Correcting an income tax return is easiest in OECD high-income economies, followed closely by Europe & Central Asia economies

South Asia 47.6 hours

Latin America & the Caribbean 20.3 hours
Sub-Saharan Africa 18.9 hours
East Asia & Pacific 18.2 hours
Middle East & North Africa 15.6 hours
Europe & Central Asia 8.5 hours
OECD high income 8.0 hours

Source: Doing Business database

Figure 9
The audit time resulting from a simple mistake in an income tax return is the longest in Latin America & the Caribbean

Latin America & the Caribbean 11.5 weeks

East Asia & Pacific 9.3 weeks
South Asia 9.2 weeks
Sub-Saharan Africa 8.4 weeks
Middle East & North Africa 5.4 weeks
Europe & Central Asia 3.4 weeks
OECD high income 2.8 weeks

Note: The averages include those economies where the correction is unlikely to trigger an audit and which therefore have an audit time of zero.
Source: Doing Business database

27
Administrative tax appeals
Tax disputes are common in any tax system.
Disputes between a tax authority and taxpayers
must be resolved in a fair, timely and efficient
manner.30 In the first instance, taxpayers should
attempt to settle their final tax assessment with
the tax authority. If a dispute continues, however,
taxpayers should have the opportunity within
a prescribed period of time to seek resolution
from a special administrative appeal board or
department. The creation of boards of appeal within
tax administrations is considered by the OECD
as an effective tool for addressing and resolving
complaints and avoiding the overburdening of the
courts.31 A serious backlog of tax cases threatens
revenue collection.32
Resolving tax disputes in a way that is independent,
fast and fair is important. The IMFs TADAT tool
also assesses the adequacy of tax dispute resolution
by looking at whether an appropriately graduated
mechanism of administrative and judicial review
is available, whether the administrative review
mechanism is independent of the audit process
and whether information on the appeal process
is published. An internal administrative review
process must safeguard a taxpayers right to
challenge an assessment resulting from a tax audit.
The process should be based on a legal framework
that is known by taxpayers, is easily accessible and
independent and resolves disputed matters in a
timely manner. Internal reviews can be achieved
through a separate appeals division, a senior
official that does not directly supervise the original
case auditor or a new auditor with no previous
knowledge of the case. Operational manuals should
be developed, decisions should be published and
annual appeal statistics should be reported helping
to create a positive public perception of the tax
administrations integrity.
Figure 10
Most economies have an independent department within the tax office for taxpayer appeals (number of economies)
17 Different auditor
Independent department
19 outside tax office
20 Same auditor
Source: Doing Business database
30
Thuronyi, Victor. 2003. How Can an Excessive Volume of Tax Disputes Be Dealt With? Legal Department, International Monetary Fund, Washington, DC.
OECD (Organisation for Economic Co-operation and Development). 2010. Chapter 6: Compliance, Enforcement, Appeals. In Better Regulation in Europe.
31 
Paris, France: OECD.
Gordon, Richard. 1996. Chapter 4: Law of Tax Administration and Procedure. In Tax Law Design and Drafting, edited by Victor Thuronyi. Washington, DC:
32 
International Monetary Fund.
28 Paying Taxes 2017. World Bank Group commentary
Through the Paying Taxes indicators, Doing
Business conducts research on what kind of first
level administrative appeal process exists in
an economy following a corporate income tax
47
In only 47
audit where a taxpayer disagrees with the tax
authoritys final decision. The data on first level economies,
administrative appeal process are not included however,
in the distance to frontier score for Paying Taxes. respondents
In 123 economies the first level administrative reported that
appeal authority is an independent department the time limits
within the tax office (Figure 10). for appeals are
consistently
Appeal guidelines are available to taxpayers applied in
either through a printed publication, online or
practice.
in person at the tax office in the 171 of the 180
economies covered by Doing Business that levy
corporate income tax. In 102 economies the legal
framework imposes timeframes on the taxpayer
and the appeal authority for each stage of the
appeal process. In only 47 economies, however,
respondents reported that the time limits are
consistently applied in practice.
In Chile a taxpayer can appeal to the regional
director of the Chilean Internal Revenue Service
(SII) following a corporate income tax audit
where the taxpayer disagrees with the tax
authoritys final decision. Guidelines on how
to appeal the decision and the timeframe to
conclude the process are easily accessible to
the public through the SIIs website. By law, the
Chilean Tax Code sets a time limit of 50 days for
the SIIs regional director to issue a decision on
the appeal. This time limit is applied in practice.
64
No administrative appeal authority
1
Independent department within
tax office 123
Conclusion
Little is known about the tax compliance cost of This analysis
post-filing procedures. This analysis is therefore is intended
intended to generate new research to better to generate
understand firms decisions and the dynamics new research
in developing economies, to highlight which to better
processes and practices work and which do not understand
and, eventually, to induce governments to reform firms decisions
and enhance their post-filing processes.
and the
dynamics in
The new indicator on the adequacy of post-filing
processes provides policy makers who are dealing developing
with the challenge of designing an optimal tax economies.
system with a broader dataset that allows them to
benchmark their economy against others on the
administrative burden of complying with post-
filing procedures.

Authors
This case study was written by Emily
Jane Bourke, Joanna Nasr, Nadia Novik
and Rodrigo A. Sarmento de Beires.

29
Chapter 2 PwC commentary

30 Paying Taxes 2017

This chapter starts with a consideration of the three
original sub-indicators of Total Tax Rate, time to comply
and the number of payments. We look at significant
changes in the global averages for sub-indicators over
the last year and at the trends since 2004. We also look
at how they compare between regions.

We then focus on the new post-filing index, comparing

how the different geographic regions perform on each
component of the index, and on the overall index. We
also examine the differences in the post-filing processes
exhibited by economies in different income groupings.

PwC commentary 31
 The averages for the original three Paying
Taxes sub-indicators have continued to fall
in the most recent year.

The global results

On average around the world in 2015 our case
study company paid taxes amounting to 40.6%
of its commercial profit, took 251 hours to
prepare, file and pay its three main taxes and had
a number of payments sub-indicator of 25.0. As Down Down Down
shown in Figure 11, the averages for these three 0.1% 8 hours 0.8 payments
Paying Taxes sub-indicators have continued to
fall in the most recent year. The rate of decline
for the compliance sub-indicators has increased
compared to the previous year.

Figure 11
8.4 8.4 100 99 12.7
The global results 12.3

Total Tax Rate Time to comply Number of payments

2014: 2015: 2014: 2015: 2014: 2015:
40.7% 40.6% 259 hours 251 hours 25.8 25.0

8.3 8.0

Other taxes

98 96

12.5 12.2

16.2 16.3

93 90 Labour taxes

10.1 9.7

Profit taxes
16.2 16.3 68 65 3.2 3.1

Source: PwC Paying Taxes 2017 analysis.

32 Paying Taxes 2017

Total Tax Rate
In 2015, the Total Tax Rate fell by 0.1 percentage
points, reinforcing the trend seen in previous
years that overall the rate has stabilised.33 The
small decrease in the Total Tax Rate masks
a varied underlying picture as 44 economies
actually increased their Total Tax Rate in the year
while 38 economies implemented measures which
caused their Total Tax Rate to fall.
While tax competition clearly still exists in the
international tax system, governments are making
a variety of choices as to how they use their tax
systems to raise the tax revenues they need to fund
public finances. For example, Chile increased its
statutory corporate income tax rate from 21% in
2014 to 22.5% in 2015 and it will increase further
in both 2016 and 2017, while Denmark did the
reverse, reducing its statutory rate of corporate
income tax from 24.5% to 23.5%. We also see
the overall rate of social security payments for
employers being raised from 17% to 18% in
Nicaragua, whereas Romania chose to cut its social
security rate from 20.8% to 15.8%. Another good
example of how the picture varies is in other taxes
where South Africas property tax increased from
1.7% to 1.8% while in Canada it was reduced from
2.9% to 2.8%.
The taxes which have been adjusted most by
governments in the last year are corporate income
tax and social security contributions. The EU
& EFTA region was most active, with 21 out of
32 economies changing their Total Tax Rates.
In comparison, in the Middle East region, only
three economies (out of 13) changed their Total
TaxRates.
Figure 12 shows the 11 year trend for the three
tax categories within the Total Tax Rate. The rate
for all three has fallen since 2004. Other taxes
continue to account for the smallest proportions
of the Total Tax Rate with the remainder shared
broadly equally between profit and labour taxes,
as has been the case since 2012. Interestingly,
the average rate for both profit and labour taxes
increased slightly in 2015, while the rate for other
taxes has fallen this year after a small increase in
the previous year.

Figure 12
Movement in global average Total Tax Rate by type of tax

Total Tax Rate (%)

20

Labour taxes
2015: 16.7%
Profit taxes
2015: 16.6%
15

10

Other taxes
2015: 8.5%

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Note: Paying Taxes 2017 considers 190 economies. Analysis of historical trend data considers only the 174 economies that have been included in the study
since Paying Taxes 2007.
Source: PwC Paying Taxes 2017 analysis.

The movements in Total Tax Rate refer to a movement exhibited by the Total Tax Rates when rounded to one decimal place. Where the economys Total Tax
33 

Rate is the weighted average of the Total Tax Rate of two cities, the movements in the Total Tax Rates of the separate cities may differ. For example in China,
Shanghai recorded an increase of 0.5% in the Total Tax Rate, whereas Beijings Total Tax Rate did not change.

PwC commentary 33
Biggest decreases in the Total Tax Rate
As shown in Figure 13, Argentina was the
economy with the largest reduction in its Total
Tax Rate for the case study company. It fell by 31.5
percentage points to 106.0% as the threshold for
the 5% rate of turnover tax was raised to ARS49
million. Since the case study companys turnover
was ARS46 million, it now falls into the lower 3%
band for turnover tax. In Argentina, profit taxes
now account for only 4% of the its Total Tax Rate
while other taxes account for 69%.
Other significant reductions in the Total Tax
Ratewere:
The Total Tax Rate in Algeria fell by 7.2
percentage points to 65.6% due to a decrease in
tax on commercial activities (Taxe sur lActivit
Profissionelle) from 2% to 1% of turnover.
San Marinos Total Tax Rate fell by
5.1 percentage points to 35.4% as newly
incorporated companies can benefit from a 50%
corporate income tax reduction for the first six
years of business activity.
The Total Tax Rate in Romania fell by 3.6
percentage points to 38.4% as the rate of social
security contributions paid by employers was
reduced from 20.8% to 15.8%.

Tajikistans Total Tax Rate fell by 16.6

percentage points to 65.2% as a result of
halving the road tax rate from 2% to 1%.
The reduction was partially offset by the
increase in the rate of land tax from TJS 722
to TJS 804 per hectare. While regulations
were finally implemented in 2015 which
reduced the corporate income tax rate for the
manufacturing sector from 15% to 14%, there
was no impact on the Total Tax Rate as the case
study company is subject to a minimum tax
rather than corporate income tax.

Figure 13
Significant decreases in the global average Total Tax Rate (as explained by movements in the individual economies)

Total Tax Rate (%)

40.7%
2014
40.7%
40.6%

40.5% Argentina
-0.17%
(-31.5%)
40.4% Tajikistan
-0.10% Algeria
(-16.6%) -0.04% San Marino
40.3% Romania
(-7.2%) -0.03%
(-5.1%)
-0.02%
(-5.1%)
40.2%

40.1% 33 economies
with an overall
reduction in the
40.0%
Total Tax Rate of
-0.21%
39.9%
(-39.7%)

39.8%

39.7%

Source: PwC Paying Taxes 2017 analysis.

34 Paying Taxes 2017

Biggest increases in the Total Tax Rate
Equatorial Guinea had the biggest increase
in the Total Tax Rate in the world, as shown in
Figure 14. It increased by 32.3 percentage points
to 79.4% as a result of raising the minimum
corporate income tax from 1% to 3% of turnover.
As a result, profit tax now accounts for 67%
of the countrys Total Tax Rate, compared to
44% in 2014. This is the main driver for the
0.6 percentage point increase in Total Tax Rate
observed for the Africa region.
Other large increases in the Total Tax Rate were
as follows:
An increase of 11.8 percentage points to
48.3% in Afghanistan due to the rate of
business receipt tax levied on income from
profit generating activities doubling from 2%
to 4%.
An increase of 2.4 percentage points to
43.8% in Malta as the capital gains tax on
the sale of immovable property situated in
Malta was replaced by a property transfer tax
levied at a higher rate of 8% on the property
value, the social security contributions paid
by employers also increased slightly and a
new maternity leave fund contribution was
introduced.
An increase of 2.0 percentage points to 33.1%
Tax collections (AZN millions)
in Fiji because the superannuation fund
contribution paid by employers was increased
from 8% to 10% of gross salaries and a change
in tax authoritys position to impose both
corporate income tax and withholding tax on
interest incomes.

An increase of 8.9 percentage points to 57.7%

in Cameroon as the minimum corporate
income tax rate was doubled from 1% to 2%.
This was partially offset by a reduction in the
statutory rate of corporate income tax from
35% to 30%.

Figure 14
Significant increases in the global average Total Tax Rate (as explained by movements in the individual economies)

Total Tax Rate (%)

40.7%

40.6%
2015
40.6%
40.5%

40.4%
Equatorial
Guinea
Afghanistan +0.19% 40.3%

+0.08% (+32.3%)
Cameroon (+11.8%)
Malta
Fiji +0.06% 40.2%
+0.02% (+8.9%)
+0.02% (+2.4%)
(+2.0%)
39 economies 40.1%

with an overall
increase in the
40.0%
Total Tax Rate of
+0.10%
(+17.7%) 39.9%

39.8%

39.7%

PwC commentary 35
Regional comparison of the Total Tax Rate

As shown in Figure 15 South America is the

region with the highest Total Tax Rate and the
2.7
South America
Middle East is the region with the lowest Total Tax
Rate. The order of the regions has not changed recorded the
since last year despite movements in the Total largest Total
Tax Rates of the different regions. For four of the Tax Rate
regions, the Total Tax Rate has decreased, with reduction of
South America recording the largest reduction 2.7 percentage
of 2.7 percentage points. Central Asia & Eastern points.
Europe (1.0 percentage points), EU & EFTA
(0.4percentage points), and Central America
& the Caribbean (0.4 percentage points) also
recorded reductions. Africa exhibited the largest
increase in Total Tax Rate at 0.6 percentage
points, whilst Asia Pacific (0.4 percentage points)
and North America (0.1 percentage points) also
recorded small increases.

Figure 15
Regional comparison of the Total Tax Rate (%)

South America 17.0 16.4 18.9 52.3

Africa 18.2 15.1 13.8 47.1
Central America & the Caribbean 22.0 12.4 7.2 41.6
World Average 16.3 16.3 8.0 40.6
EU & EFTA 12.4 26.3 1.6 40.3
North America 19.2 16.0 3.8 39.0
Asia Pacific 17.6 10.7 7.9 36.2
Central Asia & Eastern Europe 12.7 18.7 2.8 34.2
Middle East 9.2 14.4 0.6 24.2

40.6 World average

Profit taxes Labour taxes Other taxes

Source: PwC Paying Taxes 2017 analysis.

36 Paying Taxes 2017

Time to comply
The global average for time to comply has reduced
significantly by 8 hours compared to a 5 hour
reduction last year. The reduction was spread
evenly across the three taxes covered as shown in
Figure 16. The overall movement is the result of
decreases in the time to comply for 41 economies
and increases for 22 economies.
Improvements in electronic tax systems and in
information technology more generally continue
to play a key role in reducing the time needed
by taxpayers to file and pay taxes. In economies
where electronic filing and payment have already
been implemented, efforts continue to improve
the systems further, for example by fixing bugs or
integrating tax systems with accounting systems
to reduce preparation time. In addition, some
economies like Kenya and Fiji have reduced the
administrative work required to prepare and
file tax returns by simplifying or cutting the
number of tax procedures, by allowing taxes
to be filed and paid jointly, and by requiring
taxpayers to submit less information and fewer
supportingdocuments.
Where the time to comply increased, this was
largely due to the introduction of new taxes (e.g.
in The Bahamas and Malaysia). When a new tax
is introduced, there is inevitably a period of time
when processes take longer while businesses
understand and get used to the new regulations.
As these processes become integrated into day
to day compliance and as teething issues are
resolved, it is likely that the time needed to
comply with the new tax will fall. Other increases
in the time to comply arose from amendments
to existing tax regulations which required
taxpayers to perform additional administrative
work (such as using new forms or systems or filing
more frequently). There were also instances of
increased audit activity by tax authorities.

Figure 16
Movement in the global average time to comply by tax type

Time to comply (hours)

140

120

Consumption taxes
100 2015: 99

Labour taxes
2015: 92
80

Corporate income
tax
60 2015: 65

40

20

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Note: Paying Taxes 2017 considers 190 economies. Analysis of historical trend data considers only the 174 economies that have been included in the study
since Paying Taxes 2007.
Source: PwC Paying Taxes 2017 analysis.

PwC commentary 37
Biggest decreases
Brazil, Vietnam, Senegal, Algeria, and Albania
recorded the largest reductions in their time
tocomply as shown in Figure 17.
Brazil reduced its time by 562 hours to 2,038, the
biggest reduction of any economy. This resulted
from electronic systems being used more widely
for filing, preparing, and paying all of its main
taxes; VAT, taxes related to corporate income and
social security contributions. Also, certain VAT and
corporate income tax returns were eliminated as
well as other ancillary obligations. As explained
on page 40, this is the first time that the time to
comply for Brazil has fallen since the Paying Taxes
study began, but the country still has the highest
time to comply. The reduction in time to comply for
Brazil is the result of electronic systems that were
introduced some years ago having now bedded
down resulting in more efficient tax compliance
processes with more improvements expected in the
future.
Vietnam continued to implement measures that
reduced the time to comply, and in 2015 recorded
the second greatest reduction of the economies in
the study. The time dropped by 230 hours to 540
hours. The reduction was seen across all three
types of tax as follows:
Figure 17
Significant decreases in the global average time to comply (as explained by movements in the individual economies)
Time to comply (hours)
259
2014
259 hours
257
Brazil
255
-2.99
(562 hours)
253
251
249
247
245
Source: PwC Paying Taxes 2017 analysis.
243
38 Paying Taxes 2017
Labour tax time fell by 84 hours as procedures for
social security were reduced, fewer supporting
documents were required, new software was
introduced, rules for calculating the tax liability
were simplified and taxpayers can now use email
to communicate with the tax authorities.
VAT time fell by 74 hours as the company
can now file on a quarterly rather than a
monthly basis, procedures to comply with
VAT obligations were simplified, and fewer
supporting documents are now required.
Corporate income tax time fell by 72 hours as,
instead of a requirement to file quarterly, the
tax return is now filed annually. Also various
adjustments to accounting figures that were
required for tax purposes were eliminated, and
efforts were made to align tax and accounting
rules.
Other significant reductions in time to comply
were seen in Senegal (179 hours), Algeria (120
hours), and Albania (96 hours). In Senegal and
Algeria, the reduction was due to improvements
made to the accounting systems used for preparing
and filing taxes, while Albania decreased its
time by upgrading the information technology
infrastructure, requiring businesses to file VAT, CIT
and labour contributions online, and integrating its
tax platform with accountingsoftware.
Vietnam
-1.25
(230 hours)
Senegal
-0.98 Algeria
(179 hours) -0.66 Albania
(120 hours) -0.53
(96 hours)
35 economies
with total
reduction in time
to comply of
-3.57
(672 hours)
Biggest increases
Figure 18 shows that the time to comply
increased most in The Bahamas, by 175 hours
to 233 hours. A VAT system was introduced
which requires monthly filing for our case study
company. Even though the tax was introduced
with electronic systems, as it is new, there is
inevitably a transition period while businesses
understand and get used to the new system.
Additionally, in The Bahamas, there was an
increase in the time required to comply with
social security contributions. The contributions
are now paid and filed monthly, but more time
is spent re-entering data as the online form does
not permit information to be saved and rolled
forward from month to month.
Malaysias time to comply increased by 46
hours to 164 hours. This was the second largest
increase in time across the economies in the
study. Malaysia has replaced its sales tax with
a goods and services tax system. As discussed
elsewhere in this publication (see Chapter 4)
goods and services taxes can offer advantages
over a sales tax. Similar to the experience in The
Bahamas, it may be some time until businesses
fully understand the new tax system and are able
to comply with it in the most efficient way.
As the goods and services tax can be filed and
paid online there are already some efficiencies
inherent in the new tax system. Improvements
were also made in the period to the system for
paying and filing employment provident fund
contributions.
Chad introduced a new tax management
system which requires taxpayers to visit the
tax authoritys office after they have filed the
tax returns to obtain a notice of tax assessment
before they can make VAT and corporate income
tax payments. They
Tax collections must
(AZN visit the tax authoritys
millions)
office again to collect tax payment receipts. This
added 34 hours to the time to comply.
Rwanda and Bangladesh have additional time
to comply of 15 hours and 13 hours respectively.
Rwanda now requires employers to submit social
security returns on a monthly basis instead of
quarterly, while Bangladesh now scrutinises the
taxpayers VAT calculation and documentation
more rigorously, which prompted taxpayers to
spend more time checking their tax calculations
and documentation.

Figure 18
Significant increase in the global average time to comply (as explained by movements in the individual economies)

Time to comply (hours)

259

257

255

253

251
2015
251 hours
Malaysia Bahamas, The
Bangladesh Rwanda Chad +0.91 249
18 economies +0.18 +0.24
+0.05 +0.06 (175 hours)
(46 hours)
with total (13 hours) (15 hours) (34 hours)
increase in time 247
to comply of
+0.54
(103 hours)
245

243

Source: PwC Paying Taxes 2017 analysis.

PwC commentary 39
Regional comparison of the time
tocomply
As shown in Figure 19, South America is the region
with the longest average time to comply
and the Middle East has the shortest time to
comply. Similarly to the Total Tax Rate, the order of
the regions stayed the same compared to last year.
Driven by the changes in Brazil, South America
had the largest decrease in the time to comply
(50 hours), whilst there were also decreases in
Central Asia & Eastern Europe (13 hours), Africa
(7 hours), Asia Pacific (6 hours) and EU & EFTA
(3 hours). Central America & the Caribbean
increased its time to comply by 5hours.

Figure 19
Regional analysis of the time to comply (hours)

South America 116 178 270 564

Africa 86 104 117 307
World Average 65 90 96 251
Central Asia & Eastern Europe 65 73 95 233
Asia Pacific 66 68 78 212
Central America & the Caribbean 39 90 81 210
North America 85 52 60 197
EU & EFTA 36 76 52 164
Middle East 44 88 25 157

251 World average

Corporate income tax Labour taxes Consumption taxes

Source: PwC Paying Taxes 2017 analysis.

Brazil
Time to comply drops by 22%
Since the first edition of Paying Taxes over 10 years This year, the Paying Taxes study includes a new sub-

ago, the time to comply for Brazil has stubbornly
remained at 2,600 hours. This year, for the first
time, the time to comply for Brazil has reduced to
2,038hours.
The Paying Taxes study requires the World Bank
to consider submissions made by a number of
contributors including PwC. For the first time there
has been a consensus amongst these contributors on a
reduction of the time to comply that seems to confirm
the growing maturity of the electronic tax reporting
systems introduced by the Public Digital Bookkeeping
System or SPED for both federal and state taxes over
the past five years.
The time recorded of 2,038 is the median of the range
of estimates made by contributors. The figure
estimated by PwC Brazil is at the lower end of this
range, noting that the case study company hasa simple
fact pattern and is designed to facilitate international
comparisons, but recognising that the actual time to
comply for a real life company might be different.
We hope that the reduction in the time to comply
continues in the future, with the Brazilian tax
authorities keeping their commitment to simplifying
and facilitating reporting requirements, without
triggering additional compliance associated costs for
taxpayers.
562
indicator, the post-filing index. As is set out in other
sections of this publication, this aims to measure and
compare two post filing processes, a VAT refund and
the correction of an inadvertent corporate income Brazil has
tax error. The first results for Brazil show a score of reduced
8.03 on a scale of between 0 and 100, which is well its time to
below the average for the South American region of
comply for the
33.00. There is clearly room for improvement and
simplification of the post-filing processes examined first time by
by the study. As regards the measure for VAT, it is 562 hours.
of note that Brazil receives a score of zero. This is
because the case study company and the scenario
used to make comparisons under the study (a simple
excess of input VAT over output VAT as a consequence
of a capital purchase of machinery) is not eligible
for an ordinary VAT refund under Brazilian tax
legislation. Nevertheless, other forms of tax credits
are available and are commonly used by companies
with a range of commercial operations. Even in
these other cases, where a VAT refund mechanism is
available and commonly used by Brazilian taxpayers,
the monies claimed can take considerable time to
berefunded.

40 Paying Taxes 2017

Number of payments
The global average for the number of payments
sub-indicator has reduced by 0.8, compared to
a reduction of 0.6 last year. Similarly to time
24
economies saw
to comply, the proportion across the main
categories of taxes has stayed roughly the same a reduction in
as can be seen from Figure 20. There was a their number of
reduction in the sub-indicator in 24 economies. payments sub-
This was mainly driven by the introduction and indicator.
use of electronic filing and payment systems. If
a tax is paid and filed online by the majority of
medium-sized companies in an economy, then
that tax is counted on the sub-indicator as having
one payment, even though the tax may be paid
more frequently. In some economies taxes were
eliminated, e.g. Azerbaijan abolished its vehicle
tax while New Zealand removed its cheque duty.
However, eight economies recorded an increase
in the number of payments due to taxes needing
to be filed more frequently, and also due to the
introduction of new taxes without widespread
electronic filing and payment systems.

Figure 20
Global average number of payments sub-indicator by tax type

Number of payments

16

Other taxes
2015: 12.5
12

Labour taxes
2015: 9.7

Profit taxes
2015: 3.1

0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Note: Paying Taxes 2017 considers 190 economies. Analysis of historical trend data considers only the 174 economies that have been included in the study
since Paying Taxes 2007.
Source: PwC Paying Taxes 2017 analysis.

PwC commentary 41
Biggest decreases in the number Lastly, for Vietnam the sub-indicator dropped
ofpayments

As shown in Figure 21, Jamaica showed the

by 12 to 31 because quarterly VAT filing
and payment were introduced for taxpayers
with a turnover below 50 billion VND. Also,
26
Jamaica
greatest improvement on the number of environmental protection fees were removed
payments sub-indicator, reducing the number when enterprises were made responsible for reduced the
of payments for 2015 by 26 to 11. Electronic tax treating their own waste and scrap. number of
filing was introduced several years ago, but it payments sub-
was only in 2015 that taxpayers were required indicator by 26.
to file tax returns electronically, so the systems
are now used more widely. This is similar to the
position in Mongolia and Kosovo, both having a
reduction of 22 in the sub-indicator to 19 and 10
respectively.

Following Kosovo and Mongolia, Tajikistans

number of payment sub-indicator fell by
16 to 12. Starting from July 2015, taxpayers
are allowed to maintain and file VAT invoices
electronically while previously, they were
required to file a hard copy of the invoices. In
addition, the majority of taxpayers filed and paid
road tax electronically in2015.

Figure 21
Significant decreases in the global average number of payments (as explained by movements in the individual economies)

Number of payments
25.8
2014
25.8
(payments) Jamaica
25.6
-0.12
(26 payments) Kosovo
-0.11
25.4 (22 payments) Mongolia
-0.11 Tajikistan
(22 payments)
-0.07 Vietnam
(16 payments) -0.06
25.2
(12 payments)

25.0

24.8
19 economies
with total
24.6
reduction in
number of
payments of
-0.51
24.4 (101 payments)

24.2

Source: PwC Paying Taxes 2017 analysis.

42 Paying Taxes 2017

Biggest increases in the number The number of payments sub-indicator increased
ofpayments

The most significant increases in the number of

by one in each of the following economies:

Colombia has introduced a net wealth tax,

payments sub-indicator were in The Bahamas
and Croatia which both had increases of 12 as
shown in Figure 22. In The Bahamas, the change
was due to the introduction of a VAT system, as
mentioned earlier, while in Croatia, a radio and
television fee was enforced in 2015. The fee must
be paid monthly to Croatia Radio and Television.
While the amount of the radio and television fee
is small, it was not implemented electronically so
adding a disproportionate administrative burden.
Rwanda and Tanzania both increased their
sub-indicator result by 4 payments. In Rwanda,
employers are now required to submit social
security returns on a monthly instead of a
quarterly basis. The Workers Compensation Act
2008 was enforced in Tanzania, and accordingly
the workers compensation tariff was introduced,
increasing payments. On the other hand, the
abolition of the excise levy reduced the number
ofpayments.
12
Two economies
which is levied at a progressive rate ranging
from 0.2% to 1.15% on net wealth exceeding increased their
COP 1,000,000,000. The tax is paid by number of
companies and individuals and can be paid payments sub-
electronically. indicator by 12.
Kenya has introduced a capital gains tax at
Tax collections (AZN millions)
5% which is treated separately from corporate
income tax.
Kiribati has introduced a VAT system to
replace customs duties. The VAT rate is 12.5%
and is due on a quarterly basis (pro-rated
for2015).
Malta has introduced a tax on property
transfers, in respect of immovable property
situated in Malta. The new final withholding
tax is 8% on the value of the property
transferred. One payment is now recorded
as this tax is withheld by the notary at the
moment the agreement is registered.

Figure 22
Significant increases in the global average number of payments (as explained by movements in the individual economies)

Number of payments
25.8

25.6

25.4

25.2

25.0
2015
The Bahamas 25.0
Rwanda Croatia +0.06 (payments)
24.8
Tanzania +0.06 (12 payments)
4 economies +0.02 +0.02
(12 payments)
(Colombia, (4 payments) (4 payments)
Kenya, 24.6
Kiribati,Malta)
+0.02
(1 payment each)
24.4

24.2

Source: PwC Paying Taxes 2017 analysis.

PwC commentary 43
Regional comparison of the number
ofpayments sub-indicator

As shown in Figure 23, Africa is the region with

4.3
Central Asia &
the largest number of payments, and North
America has the lowest number. The order Eastern Europe
of the regions is unchanged from last year. had the largest
Between 2015 and 2014, Central Asia & Eastern reduction in
Europe had the largest reduction in the number the number of
of payments (4.3 payments). Asia Pacific (1.9 payments sub-
payments), South America (0.9 payments) and indicator (4.3).
Central America & the Caribbean (0.7 payments)
also recorded a decrease in the number of
payments sub-indicator. EU & EFTA was the only
region which recorded an increase in payments
(0.3 payments).

Figure 23
Regional comparison of the number of payments sub-indicator

Africa 3.9 15.5 17.3 36.7

Central America & the Caribbean 5.2 11.8 15.8 32.8
World Average 3.1 9.7 12.2 25.0
Asia Pacific 3.2 9.9 10.4 23.5
South America 3.1 8.1 11.4 22.6
Central Asia & Eastern Europe 2.6 4.8 11.0 18.4
Middle East 1.1 10.4 5.6 17.1
EU & EFTA 1.4 2.9 7.5 11.8
North America 1.5 2.9 3.8 8.2

25.0 World average

Profit taxes Labour taxes Other taxes

Source: PwC Paying Taxes 2017 analysis.

44 Paying Taxes 2017

 Post-filing index
As explained in Chapter 1, this year the Paying Taxes
study includes a new post-filing index that looks
at the time taken to prepare and receive a VAT or
goods and services tax (GST) refund claim34 and
the time required to correct a corporate income
tax (CIT) return and deal with any subsequent tax
audits. In this section we look at the results for the
four components of the post-filing index:
1. Time to comply with a VAT refund
2. Time to obtain a VAT refund
3. Time to comply with a CIT audit (including
time to correct the CIT return)
4. Time to complete a CIT audit (if applicable)
In Figure 24 below we show the average post-
filing index score for the geographic regions. The
score is from 0-100 with 0 being the least efficient
and 100 the most efficient. We also show for each
region the average score for each component of
the index. It can therefore be seen from Figure24
that EU & EFTA is the highest scoring region
overall and for each of the components. South
America has the worst overall score, scoring 0 for
both VAT components as our case study company
would be unable to claim a VAT refund in any
economy in the region.

Figure 24
Post-filing index distance to frontier score by region and component

Distance to frontier score

100
Time to comply Time to obtain Overall average
with VAT refund VAT refund DTF score
90 88.8
(DTF score) (DTF score)

80

70.7
70 66.3
64.5

60 58.5
55.3

50 47.0

40
33.0
30

20

10

90 80 70 60 50 40 30 20 10 0 10 20 30 40 50 60 70 80 90 100
South America
Central America & the Caribbean
Africa
Asia Pacific
Central Asia & Eastern Europe
Middle East
North America
EU & EFTA
10

20

30

40

50

60

Key
70 South America
Central America & the Caribbean
80
Africa
Asia Pacific
Central Asia & Eastern Europe
Time to comply 90 Time to complete Middle East
with CIT Audit CIT Audit North America
(DTF score) 100
(DTF score) EU & EFTA

Source: PwC Paying Taxes 2017 analysis.

34
Throughout this section, references to VAT should be taken include GST systems.
PwC commentary 45
Securing a VAT refund
Is a VAT refund available to the case
studycompany?
In 2015, 162 economies of the 190 economies in
the study had a VAT (or GST) system.35
Our model scenario presupposes that our
case study company invests in a large piece of
machinery. As a result, in the 162 economies
where VAT or GST systems exist, the VAT incurred
on the purchase is considerably larger than the
VAT that it receives on its sales in that month. As
mentioned in Chapter 1, ideally a VAT system
should aim to be neutral and efficient, so where a
business incurs more VAT on its purchases than it
collects on its taxable sales in a given tax period,
it should be entitled to claim the difference from
the government. The amount of VAT owed to a
business by the government is known as excess
input VAT.
This study considers whether the company can
make a claim to receive a cash payment of the
excess input VAT. In most cases, regardless of the
availability of VAT refund, the company would be
able to carry forward the excess VAT and offset it
against the VAT it receives on future sales.
For our case study, after four months of being
carried forward, the excess input VAT would have
been reduced to nil.
The post-filing index shows that our case study
company would be able to receive a VAT (or GST)
refund in 93 economies as shown in Figure 25.36
In 64 economies it would not receive a refund.
Figure 25
VAT systems and the availability of a VAT refund to the case study company (Number of economies)
No VAT system VAT system
27
economies
162
economies
Source: PwC Paying Taxes 2017 analysis.
35
Somalia is excluded from the analysis as there is no practice documented yet.
36 
There are 162 economies with a VAT system. There are 5 of these economies which are not scored: Malaysia and The Bahamas are not scored as there is
insufficient evidence of current practice due to new systems. In Morocco, Sierra Leone and Equatorial Guinea, VAT does not apply to the case study purchase
and so these economies are not scored.
46 Paying Taxes 2017
Reasons for the case study company not receiving a
refund include:
the ability to claim a refund is restricted to
specific categories of taxpayers that do not
include the case study company;
the case study company is eligible to claim
a refund but cash refunds do not occur in
practice;
there is no refund mechanism in place;
input tax on a capital purchase is considered a
cost on the business; and
legislation requires taxpayers to carry forward
the excess input tax for four months or more
before a cash refund can be requested.
In line with the principles of neutrality and
efficiency, in those economies where our case
study company does not receive a refund
automatically (or where the carry forward period
is more than four months), the economy will
receive the lowest possible score on the distance
to frontier for this element of the post-filing index.
While our case study company would recover its
excess input VAT after four months of it being
carried forward, without a refund process some
companies may wait months or even years to
recover their excess input VAT and some may
never recover it fully. Typical examples might
be companies with large upfront capital costs or
companies that supply goods that are not subject
to VAT but which are entitled to recover VAT on
their purchases.
No refund Economy Refund
available not scored available to
5 case study
company
economies
64
economies
93
economies
Figure 26 shows the availability of a VAT refund
to our case study company analysed by income
group. 87% (40) of the high income economies
that have a VAT system have a refund mechanism
87%
of high income
available to the case study company, but this is the
case in only 39% (9) of low income economies.37
economies with
VAT refunds may be less common in lower income a VAT system
economies as they are less likely to have sufficient have a refund
financial resources or the administrative capacity available to
to operate a VAT refund system in a timely the case study
fashion. company.

If we analyse the availability of a VAT refund by

geographic region, we can see that refunds are
not available to the case study company in any
South American economy,38 but conversely they
are available in all the economies in EU & EFTA
and North America that have a VAT system as
shown in Figure 27.

Figure 26
VAT refund availability by income group for the case study company

High income 13% 87%

Upper middle income 41% 59%
Lower middle income 59% 41%
Low income 61% 39%

No refund available (%) Refund available to the case study company (%)

Note: This chart reflects only those economies where a VAT system exists and there is a VAT score (157 economies).
Source: PwC Paying Taxes 2017 analysis.

Figure 27
VAT refund availability by region for the case study company

41 Global average
59

EU & EFTA
Central Asia &
North America Eastern Europe
100
37
100 63
Middle East

Central America 20
& the Caribbean
Africa 80

56 44
53 47
South America Asia Pacific

100 41
59

No refund available (%) Refund available to the case study company (%)

Note: This chart reflects only those economies where a VAT system exists. Source: PwC Paying Taxes 2017 analysis.

For the current 2017 fiscal year, low-income economies are defined as those with a GNI per capita, calculated using the World Bank Atlas method, of $1,025
37 

or less in 2015; lower middle-income economies are those with a GNI per capita between $1,026 and $4,035; upper middle-income economies are those with
a GNI per capita between $4,036 and $12,475; high-income economies are those with a GNI per capita of $12,476 or more.
VAT refunds are not available to the case study company in the South American region, however, we recognise that VAT refunds may be available in practice
38 

in the region in other scenarios.

PwC commentary 47
How long does it take to comply with a VAT
refund process?
For those 93 economies in which a VAT refund is
available, the average compliance time required
to make the refund claim and respond to any
resulting audit is 14.2 hours. In 52 economies
(56%) less than 10 hours is needed to comply with
a VAT refund as can be seen in Figure 28.
On average, as shown in Figure 29 it generally
takes less time to comply with a VAT refund in
high income economies (7.9 hours) compared to
low income economies (26.9 hours).
As the time to comply with a VAT refund includes
not just the time to claim a VAT refund, but also
the time needed to prepare and submit additional
information if the refund triggers a tax audit,
14.2
hours is
the likelihood of an audit can have a significant
impact on the time needed to comply with a VAT the average
refund. If the case study company is unlikely compliance
to be audited, the average time to comply is timerequired
just 3.0 hours as it is simply the time needed to to make a VAT
make the claim. For those economies where an refund claim.
audit is judged to be likely, the time increases to
19.0hours as shown in Figure 30.

Figure 28
Distribution of the time to comply with a VAT refund

Number of economies
40

30
52
<10

20

10

0
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80

Time (hours)

Source: PwC Paying Taxes 2017 analysis.

Figure to
Unlikely 29audit 3.0
VAT
Likelyrefund
to auditcompliance time by income
19.0 group, regardless of the likelihood of audit (hours)
53% 47%
High income 7.9 59%
Upper middle income 18.5
Lower middle income 15.4
Low income 26.9
100%
Source: PwC Paying Taxes 2017 analysis.
100%

Figure 30
VAT refund compliance time global average by likelihood of audit (hours)

Unlikely to audit 3.0

Likely to audit 19.0
53% 47%
Source: PwC Paying Taxes 2017 analysis.
High income 7.9 59%
Upper middle income 18.5
48
Lower middle Paying
income Taxes 2017 15.4
Low income 26.9
100%
When this is broken down further into income
groups as shown in Figure 31, high income
economies require 14 hours of compliance time if
there is an audit, compared to 2.4 hours without
an audit. In low income economies where there
is no audit there is a compliance time of 8 hours.
This is due to Ethiopia which is the only economy
that falls into this category.
For the remaining low income economies, all
of which would be likely to have an audit, the
compliance time is 29.3 hours. In both the lower
middle and upper middle income economies,
there are only three economies without an audit.
The EU & EFTA region performs the best for time
to comply with a VAT refund, with 7.1 hours as
shown in Figure 32. South America scores the
worst for the time to comply with a VAT refund
as the refund is not available to the case study
company in any economy in the region and hence
it has a distance to frontier score of nil, and no
VAT compliance time is shown in Figure 32.
Central America & the Caribbean has the longest
time to comply of 19.6 hours.

Figure 31
Time to comply with a VAT refund by income group and likelihood of audit (hours)

2.4
High income
14.0
5.7
Upper middle income
20.2
2.7
Lower middle income
18.0
8.0
Low income
29.3

Unlikely to audit Likely to audit

Note: In the low income economies only Ethiopia is unlikely to have an audit. In upper middle income and lower middle income economies, only three
economies are unlikely to have an audit.
Source: PwC Paying Taxes 2017 analysis.

Figure 32
Time to comply with a VAT refund by region (hours)

14.2 Global average

EU & EFTA Central Asia &

Eastern Europe
North America
7.1
13.8 15.9
Middle East
Central America
& the Caribbean

Africa 19.1
19.6 Asia Pacific
18.8
16.9

Note: The analysis includes only the economies where a VAT refund is available to the case study company
and therefore there is no value shown for South America.
Source: PwC Paying Taxes 2017 analysis.

PwC commentary 49
How long does it take to obtain a
VATrefund?
If a VAT refund is not paid within a reasonable
time-frame, or if there are unexpected delays
in the payment, this can have a serious impact
on a companys cashflow, especially for smaller
companies.
our case study company will on average only wait
15.6 weeks to obtain a VAT refund compared with
28.3 weeks in low income economies. As for the
time to comply with a VAT refund, this may be
due to low income economies potentially having
less administrative capacity and insufficient fiscal
resources to pay the refunds efficiently.

The time taken to obtain a VAT refund under the
post-filing index is the time from the submission
of the VAT refund claim to the later of the date
when the company receives the cash or the date
any audit concludes. The time also includes an
average time spent waiting before the refund
claim can be submitted. The time to obtain a VAT
refund, averages 21.6 weeks across the economies
where a VAT refund is available, with the case
study company in 55 economies (59%) taking less
than 20 weeks to obtain the VAT refund as shown
in Figure 33.
Comparing the various income groups, as in
Figure 34, in high income economies,
Similarly to the time to comply, in those economies
where the case study company is likely be audited,
the time required for the audit has a large impact
on the time to obtain a VAT refund. If the case
study company is unlikely to be audited, the global
average time to obtain a VAT refund is 14.2 weeks as
shown in Figure 35. If there is likely to be an audit,
it is 24.8 weeks. The incidence of an audit does not
always imply a longer refund process perhaps due
to the audits having a narrower focus and/or being
conducted in a more efficient manner. In the case
of Hungary, for example, the VAT refund claim is
likely to trigger an audit, but it only takes just under
14weeks to obtain the refund. This is shorter than
the overall average for high income economies.

Figure 33
Distribution of the time to obtain a VAT refund

Number of economies
25

55
20 <20

15

10

0
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85

Time (weeks)
Source: PwC Paying Taxes 2017 analysis.

Unlikely to
Figure 34audit 14.2
Likely to
Time to audit 24.8
obtain a VAT refund by economic grouping regardless of the likelihood of audit (weeks)
53% 47%
High income 15.6
Upper middle income 23.2
Lower middle income 29.3
Low income 28.3
100%
Source: PwC Paying Taxes 2017 analysis.
100%

Figure 35
Time to obtain a VAT refund global averages by likelihood of audit (weeks)

Unlikely to audit 14.2

Likely to audit 24.8

Source: PwC Paying Taxes 2017 analysis. 53% 47%

High income 15.6
50
Upper middle Paying
income Taxes 2017 23.2
Lower middle income 29.3
Looking at the impact of an audit by income
groups, in those high income economies where
an audit is unlikely, our case study company will
only wait 13 weeks on average to obtain a VAT
refund, compared to 18.6 weeks in high income
economies where the refund is likely to trigger
an audit as shown in Figure 36. The difference in
time for low income economies is higher. There
is only one low income economy, Ethiopia, where
an audit is unlikely. The case study company in
Ethiopia will only wait 10.2 weeks on average to
receive its refund. This triples to 30.6 weeks in
those economies where an audit is expected and
thus the time spent waiting for a refund will be
affected by the audit process.
Figure 37 shows the time to obtain a VAT refund
by geographic region. As for the time to comply
with a VAT refund, the EU & EFTA region
performs the best on the time to obtain a refund,
with an average time of 14.8 weeks. Again,
South America scores the worst as the refund is
not available to the case study company in any
economy in the region (hence there is no value
shown in Figure 37 for South America as the time
to obtain a VAT refund cannot be measured for
the case study company). Central America & the
Caribbean has the longest waiting time requiring
34.7 weeks on average to obtain the VAT refund.

Figure 36
Time to obtain a VAT refund by income group and likelihood of audit (weeks)

13.0
High income
18.6
17.4
Upper middle income
23.9
20.9
Lower middle income
30.9
10.2
Low income
30.6

Unlikely to audit Likely to audit

Note: In the low income economies only Ethiopia is unlikely to have an audit. In upper middle income and lower middle income economies, only three
economies are unlikely to have an audit.
Source: PwC Paying Taxes 2017 analysis.

Figure 37
Time to obtain a VAT refund by region (weeks)

21.6 Global average

EU & EFTA Central Asia &

Eastern Europe
North America
14.8
23.5 19.3
Middle East
Central America
& the Caribbean

Africa 30.3
34.7 Asia Pacific
27.3
20.5

Note: The analysis includes only the economies where a VAT refund is available to the case study company
and therefore there is no value shown for South America.
Source: PwC Paying Taxes 2017 analysis.
The global picture 51
Correcting a corporate income tax error
Our model scenario for a CIT error is that our
case study company makes an inadvertent error
in its corporate income tax return that results in
it underpaying its CIT liability by 5%. The error
is spotted by the company and notified to the tax
authority after the deadline for filing the return,
but before the end of the deadline for the tax
authority to audit the company. This scenario
applies in the 180 economies (95%) in which CIT
was levied in 2015, as shown in Figure 38.
The time to comply with a CIT audit includes
the time taken to correct the error in the tax
return. If the correction is likely to trigger an
audit, the time required to prepare and submit
data required by the auditor is also included in
the time to comply component of the post-filing
index. The time to complete a CIT audit is the
time that elapses between the start of any audit
arising from the error and the time the company
received formal notification that the audit has
been concluded.
If the correction of the error in the CIT return
is unlikely to trigger an audit, then the time to
comply with a CIT audit will be lower as it will
reflect only the time needed to amend the CIT
return and not to audit it. The time to complete
a CIT audit will be zero if an audit is thought
unlikely to take place. The judgement of the
World Bank and the contributors to the study as
to whether an audit is likely or not for the given
scenario therefore has a significant impact on
theresults.
On the one hand, tax audits are necessary to help
ensure that taxpayers meet their compliance
obligations. On the other, it is reasonable in
many cases to expect the tax authority to trust a
taxpayers unprompted disclosure. The balance
between these two elements will vary from
economy to economy and company to company.
Figure 38
Economies with corporate income tax systems which would audit the CIT correction (number of economies)
No corporate Corporate income tax
income tax
9 180
economies
economies
Note: Somalia is excluded from the analysis as there is no practice documented yet and therefore Figure 38 includes only 189
economies.
Source: PwC Paying Taxes 2017 analysis.
52 Paying Taxes 2017
Getting the balance right allows tax authorities to
focus often limited resources on the areas where
the risk of underpaying taxes is greatest. Paying
Taxes 2016 included an article on co-operative
compliance models for tax in African countries.
It outlined some practical measures that could
enable the effective and efficient implementation
of sustainable co-operative compliance models in
Africa, which could be used to alleviate difficult
postfiling compliance regimes.
Globally, the post-filing index shows that, for our
case study, correcting a CIT return is likely to lead
to a tax audit in 74 (41%) of the 180 economies
that have a CIT system. In 106 economies (59%)
the correction was judged unlikely to trigger
an audit. Those economies that are unlikely to
impose an audit receive the best score on the
distance to frontier for this component of the
post-filing index. As for our simple case study
scenario, it will often be reasonable to expect the
tax authority to trust the taxpayers disclosure
given the size of the company, the straightforward
nature of its business, and the voluntary nature
of the disclosure. In many economies however,
there may be good reasons why the company
should be audited and in such cases the audit
should be as targeted and as efficient as possible.
In Lithuania, Estonia, Portugal and Georgia, the
correction is unlikely to lead to an audit and the
total compliance time is 1.5 hours. In Bhutan,
where an audit is likely, the total compliance time
(including audit) is 3 hours, whilst the time to
complete the audit is 1.7 weeks. At the other end
of the scale, the longest compliance time where
there is an audit, is in Afghanistan with a total
compliance time of 211.5 hours. Jamaica has the
longest time to complete the CIT audit of
61.1 weeks.
Audit (41%) No audit (59%)
74
economies
106
economies
Figure 39 shows that, for economies with a CIT
system, the CIT correction is likely to trigger an
audit in 59% of low income economies, but only in
24% of high income economies.
84%
In EU & EFTA,
Across our geographic regions, as shown in
the case study
Figure40, the EU & EFTA region again performs company would
the best, as the case study company would be be unlikely to be
unlikely to be subjected to an audit in 84% subjected to an
ofeconomies. audit in 84% of
economies.

Figure 39
Likelihood of a CIT audit by income group (%)

High income 76% 24%

Upper middle income 62% 38%
Lower middle income 47% 53%
Low income 41% 59%

Audit unlikely (%) Audit likely (%)

Source: PwC Paying Taxes 2017 analysis.

Figure 40
Likelihood of a CIT audit by region (%)

41 Global average
59

EU & EFTA
Central Asia &
North America 16 Eastern Europe

84 37
33
63
67 Middle East

Central America 22
& the Caribbean
Africa 78

53 47
51 49
South America Asia Pacific

50 50 45
55

Audit unlikely (%) Audit likely (%)

Source: PwC Paying Taxes 2017 analysis.

PwC commentary 53
Time to comply with a CIT audit
On average around the world, it takes the case
study company 16.7 hours to comply with a
CIT audit. Figure 41 shows that 98 of the 180
50%
Over 50% of
economies with a CIT system require less than
10 hours compliance time to correct the error economies with
and comply with any resulting audit. In 93 of a CIT system
these economies of those that require less than require less
10 hours compliance time, an audit is unlikely to than 10 hours
be triggered and so the time is only that which to correct a
is needed to correct the tax return and pay the CIT return and
amount of tax due. In the remaining five of comply with any
these economies, an audit will be triggered and resulting audit.
the time includes complying with the auditors
requirements.

Figure 41
Distribution of the time to comply with a CIT audit

Number of economies

70

98
60
<10

50

40

30

20

10

Time to comply
with a CIT audit
Audit likely

0 Audit unlikely
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90

Time (hours)

Source: PwC Paying Taxes 2017 analysis.

54 Paying Taxes 2017

On average, as shown in Figure 42, whether
or not there is an audit will impact the time to
comply quite significantly. Globally, on average,
in takes 5.4 hours to comply with a CIT audit
if an audit is unlikely as the company only has
to correct its CIT return and pay the additional
amount of tax that is due. If an audit is likely, it
takes 32.8 hours on average to comply with the
CIT audit, including the time spent correcting the
CIT return.
Figure 43 also shows that in high income
economies the time to comply with a CIT audit
(12.7 hours) is less than half that in low income
economies (27.8 hours). This is driven by the
fact that, as mentioned above, the case study
company is much less likely to be subject to audit
in higher income economies. Furthermore, in
those economies where there is an audit, tax
authorities in lower income economies may
require further information through field audits
or comprehensive audits.
As shown in Figure 44, across our geographic
regions, the EU & EFTA region performs best
in respect of the time to comply with a CIT
audit, only requiring 4.7 hours on average in
comparison to the Asia Pacific region which
requires 24.4 hours of compliance time. Again,
this is driven by the fact that in 84% of economies
in the EU & EFTA region there is unlikely to be
an audit, whereas for Asia Pacific, only in 55% of
economies is an audit thought unlikely.

Figure 42
Time to comply with a CIT audit (hours)

Unlikely to audit 5.4

Likely to audit 32.8
53% 47%
Source: PwC Paying Taxes 2017 analysis.
High income 12.7 59%
Upper middle income 12.9
Figure 43audit
Unlikely to 5.4
Lower middle income 18.1
Likely to
Time to audit
comply with a CIT audit by income grouping regardless of the likelihood of32.8
audit (hours)
Low income 27.8
53% 47%
100%
High income 12.7 59%
100%
Upper middle income 12.9
Lower middle income 18.1
Low income 27.8
100%
Source: PwC Paying Taxes 2017 analysis.
100%

Figure 44
Time to comply with a CIT audit by region (hours)

16.7 Global average

EU & EFTA Central Asia &

North America
Eastern Europe
4.7
13.2 10.3
Middle East
Central America
& the Caribbean
17.0
Africa

22.8 Asia Pacific

South America 18.5
24.4
20.7

Source: PwC Paying Taxes 2017 analysis.

PwC commentary 55
Time to complete a CIT audit
Across the 74 economies in which the CIT
correction is thought likely to trigger an audit,
it takes on average 17.3 weeks to complete the
audit. For 26 economies (35%), as shown in
Figure 45, the audit will take no more than 10
weeks on average to complete. This might suggest
that in many cases the audit can be performed in
a relatively short timeframe, provided the audit
is scoped to address the specific risks presented
by the company and the error. There are however
several economies where the audit is expected to
last more than six months, and in one case over a
year, suggesting that there is considerable room
to improve audit procedures in some economies.
As shown in Figure 46, in the 17 low income
economies where an audit is anticipated, it
takes on average 15.7 weeks to complete. This
is less than in the 13 high income economies
where it takes 16.9 weeks on average. Of the
four components of the post-filing index, it is
only on the time to complete a CIT audit that
low income economies perform better than high
income ones. While an audit is less likely in high
income economies, it appears that when audits
do occur, they take more time than in low income
economies. The reasons for this are not clear and
more work is needed to explain the findings. One
possibility might be that while filing and paying
taxes can, to a large extent, be automated, an
audit is still very much a process that requires
human intervention. Thus electronic systems,
which are generally more developed in high
income economies, are less effective when it
comes to shortening the time needed for audits.

Figure 45
Distribution of the time to complete a CIT audit, where applicable

Number of economies
25
26
<10

20

15

10

0
0 5 10 15 20 25 30 35 40 45 50 55 60 65
Time (weeks)

Note: The data in the chart is only for those economies where a CIT audit is likely to take place following a correction to the CIT return.
Source: PwC Paying Taxes 2017 analysis.

Figure 46
Time to complete a CIT audit, where applicable, by income group (weeks)

High income 16.9

Upper middle income 22.5
Lower middle income 15.1
Low income 15.7

Note: The data in the chart is only for those economies where a CIT audit is likely to take place following a correction to the CIT return.
Source: PwC Paying Taxes 2017 analysis.

56 Paying Taxes 2017

Looking at the geographic regions in Figure 47,
for those economies where an audit is triggered,
EU & EFTA performs the best at 10.9 weeks on
average which is marginally better than Central
26
26 economies
Asia & Eastern Europe. A CIT audit would last the
take no more
longest in the Middle East at 26.9 weeks, however
there are only two economies in the region where than 10 weeks
an audit is likely to be triggered. on average
to complete
The new post-filing index has yielded a wealth of a CIT audit
new information about tax systems around the for the case
world. While further work is needed to explain study company
some of the findings, it is clear that there are scenario.
significant differences in post-filing processes,
whether considered by individual economy,
income grouping or geographic region. There is
considerable variation in the availability of a VAT
refund to our case study company as well as in the
likelihood of a VAT or a CIT audit. There is also
quite a range in the length of time that the various
post-compliance processes can take in different
economies. The data suggests that while there are
some very good examples of efficient post-filing
processes, there are a number of economies where
there is considerable potential for improvement.

Figure 47
Time to complete CIT audit, where applicable (weeks)

17.3 Global average

EU & EFTA
North America Central Asia &
Eastern Europe
10.9
23.9 11.0
Middle East

Central America
& the Caribbean
26.9
Africa
20.5 Asia Pacific
South America 15.9
18.3
23.4

Note: The data in the chart is only for those economies where a CIT audit is likely to take place following a correction to the CIT return.
Source: PwC Paying Taxes 2017 analysis.

PwC commentary 57
Chapter 3 Country articles

58 Paying Taxes 2017. Country articles

This chapter looks at how the Paying Taxes sub-
indicators have been affected by changes in tax
systems in our regional launch locations of Costa Rica,
Cte dIvoire, Ecuador, Hungary, and Indonesia.

59
Costa Rica
Digital innovation to increase voluntary compliance

Luis Diego Barahona, PwC Costa Rica

From 2003, the Costa Rican tax administration
has made increasing use of electronic systems to
facilitate voluntary tax compliance by taxpayers.
This has helped to achieve greater efficiency and
effectiveness in the collection of taxes which
is reflected in the Paying Taxes sub-indicators
from 2007 onwards. Standardising, simplifying
and accelerating certain processes such as filing
returns and electronic payments of taxes have all
played a part in significantly reducing the time
to comply and the number of payments.
33
Digital tax management has been gradually
developed and implemented in Costa Rica in
phases, depending on the capacity of the tax
administration. The first phase, between 2002
and 2003, was the introduction of mandatory
electronic filing and payment for large
Average number
taxpayers. As the system was optimised by
beingused by this small group of taxpayers, of payments
and the tax administration gained experience sub-indicator
and skills, the system was rolled out to cover decreased from
other taxpayers. 43 to 10 between
2004 and 2015.

Figure 48
Trend in the Paying Taxes sub-indicators for Costa Rica since 2004

% / Number of payments Hours

60 420
58.3%
Total Tax Rate

50 350

40 280

30 210

20 140
151 hours
Time to comply

10 70 10
Number of payments

0 0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

60 Paying Taxes 2017. Country articles

In 2006, a new law dealing with digital
signatures and electronic documents further
facilitated the direct delivery of services by the
tax authorities allowing them to receive and
process documents signed electronically by the
taxpayers representatives. This encouraged the
use of digital systems within all public agencies.
In 2008, the Costa Rican tax administration
introduced standardised tax returns, which were
made available to taxpayers through the Digital
Taxation website. Paying taxes was made easier
in 2013 by the implementation of electronic
tax payments, though the National System of
Electronic Payments (Sinpe).
In 2015, the tax administration developed a new
advanced technology platform, which offered
taxpayers electronic services via the Virtual Tax
Administration website. A number of electronic
services, which allow taxpayers to comply with
their tax obligations, are available on the site. The
creation of the platform and website was driven
by the tax administrations desire to maximise
voluntary tax compliance from those responsible for
declaring and paying tax.
The benefits of this digital innovation are apparent
from the movements in the time to comply and
number of payments sub-indicators. Between
2004 and 2015, the average time to comply with
tax obligation has fallen significantly from 402 to
151 hours and the average number of payments
decreased from 43 to 10 payments.
The enhancement of electronic systems has made
paying and filing taxes less time consuming and
less involved. Under the previous old fashioned,
paper-based system, tax returns had to be printed
and signed, and payments had to be made during
business hours at a specific bank, using only cheques
for that bank. Now there is an online system for
preparing and filing tax returns and, with the The enhancement
assistance of several banks, for making payments. of electronic
systems has
Companies in Costa Rica have also benefitted made paying
from a very stable tax system. Whenever tax
and filing
legislation changes, taxpayers have to spend time
understanding the new rules. A stable tax system
taxes less time
also provides companies with more certainty, which consuming and
is good for business more generally as it is easier less involved.
for companies to make investment decisions. In
Costa Rica the corporate income tax rate has been
30% since 2003 while over the same period social
security contributions have stood at 26.17% with an
increase to 26.33% from January 2015.
Costa Rica also scores well on the new post-filing
index, suggesting that not only is it relatively easy
to pay and file taxes in Costa Rica, but getting a
refund and agreeing tax liabilities is also reasonably
straight forward. Our case study company would
need to spend less than six hours requesting a
VAT refund, wait less than 15 weeks to receive the
refund, and the refund request would be unlikely
to trigger an audit. The company would need only
three hours to correct an inadvertent error in a
corporate income tax return and similar to the VAT
refund, it would be unlikely to trigger an audit. On
both of these post-filing processes therefore Costa
Rica scores not only better than the global average,
but better than the average for EU & EFTA which is
the best performing region for post-filing processes.
Despite the improvements so far to the Costa Rican
tax system, there is scope for further efficiencies.
This would help the tax administration to reduce the
amount of tax that is not paid and also to bring into
full compliance those companies that participate
in the informal economy. This, in turn, would
give those companies better access to the national
banking system.

Figure 49
Post-filing index and components for Costa Rica for 2015

Tim
nd e to
efu ob
ATr tai
V
a 14 n
a
h
rs .5
ou h
t

VA
wi

Tr
ly
mp

efu
h

ou
co

5.5

nd
rs
to
Time

91.11
Post-ling
index score
Tim

ely
e

3.0

lik
to
c

it
un

ur
om

ud
h

t
di a
o

s
a
ply

u
T

ith
A
CI
w

a te
CI
Ta m ple
ud co
it e to
Tim

Costa Rica 61
Cte dIvoire
Achieving tax reform and broadening the taxable base

Dominique Taty, PwC Cte DIvoire

The Paying Taxes 2017 launch in Cte dIvoire
comes at a time when the country is increasingly
recognised as an economic force in West Africa.
Since 2012, Cte dIvoire has had an average GDP
growth rate of 8%, and against this backdrop the
ability for the country to raise tax revenues, but
in an efficient and effective way, has become an
important priority for government in pursuing its
ambitions for future growth.
Although it has significantly expanded its tax system
during the past twenty years, the country has not
been able to demonstrate that it has an attractive tax
system through competitiveness indicators which
are often reviewed by foreign investors.
Since 2004, the three original Paying Taxes
sub-indicators assessed by the World Bank have
remained almost constant, suggesting a lack of
substantial reform of the tax system and a poor
result when compared with other economies.
11
After more than a decade, the Total Tax Rate
has only reduced by a little over two percentage
points from 53.4% (in 2004) to 51.3% (in 2015).
The government significantly reduced the
corporate income tax (CIT) rate from 35% to
25% between 2006 and 2008. However, the The case study
impact of this reduction was largely neutralised company in
by increases in social security contributions paid Cte dIvoire has
by companies. The case study company in Cte 11 taxes that
dIvoire has 11 taxes that contribute to its Total
contribute to its
Tax Rate.
Total Tax Rate.
Moreover, it is important to note that during
the socio-political crisis from 1999 to 2011,
there was a lack of financial support from donor
countries, and foreign investment fell. Collection
of tax revenues became an increasing challenge
for public funding, so that the number of taxes
was maintained along with high tax rates.

Figure 50
Trend in the Paying Taxes sub-indicators for Cte dIvoire since 2004

% / Number of payments Hours

140 350

120 300

270 hours
100 250 Time to comply

80 200

63
60 150 Number of payments
51.3%
Total Tax Rate
40 100

20 50

0 0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

62 Paying Taxes 2017. Country articles

The time to comply sub-indicator had been
272hours since the start of the study, but has
fallen slightly to 270 hours this year. With a view to
addressing the issues that lie behind this number
of hours, which has remained consistently above
the global average, in December 2015 the tax
administration implemented a single tax return
form, the Formulaire Unique. This represents a first
step towards simplifying the compliance obligations
and it is intended that this will be followed by the
implementation of an online filing (e-filing) facility.
In practice this form has not yet provided all the
benefits that were expected. Its introduction in
December 2015 means that it could not impact the
results now being released in this publication. While
the form may have some benefits for taxpayers
in future years, currently it remains a paper
declaration which covers most of the main taxes and
so it will not significantly reduce the burden without
further enhancements.
The number of payment sub-indicator (63)
measures the number of taxes, the frequency of
filings and payments made in relation to those taxes
and the method of payment. The single tax return
has attempted to provide a solution for multiple
payments by consolidating certain taxes, but the
implementation of electronic filing and payment
systems will be needed to help lower the frequency
of interactions with the tax authority and ease the
compliance burden on taxpayers.
As regards the new post-filing index, results are
mixed. For CIT post-filing, the compliance time
is lower than the world average and the fact that
an audit is not likely to happen in connection
with a CIT correction benefits the result. For VAT,
the lack of a refund being available for our case
study company (as refunds are only available
for international traders) results in a poor score. Generally
Reforms have however been introduced in speaking, the
recent years regarding VAT refunds for exporters Paying Taxes
and international traders and these have been results for Cte
welcomed. Since 2006, a state financial body has d Ivoire do not
been established which is responsible for VAT currently match
refunds for companies involved in such trade so
the countrys
that VAT credit management is more efficiently
ambitions.
handled than in the past.
Generally speaking, the Paying Taxes results
for Cte d Ivoire do not currently match the
countrys ambitions. In the Government National
Development Plan (PND) for the coming years,
the improvement of the business climate is a key
priority.
On 5 September 2014, the Prime Minister set
up a tax reform commission bringing together
stakeholders from the public and private sectors.
They were asked to review the Ivorian tax system
with the objective of aligning it with the countrys
overall development objectives.
The Prime Minister has also created a working
group which is responsible for improving Cte d
Ivoires position in the World Bank Doing Business
ranking, with reform to the tax system being an
important element. It is clear that the government
and the private sector have an appetite and high
ambition to improve the Ivorian tax system. We
would encourage the government to continue
its reflection on the mechanisms to reduce tax
rates and to examine certain taxes which may
be considered unattractive for investment.
The ultimate aim is to make Cte dIvoire more
attractive for investors, to increase investment
and to improve taxes revenues by broadening the
taxable base.

Figure 51
Post-filing index and components for Cte dIvoire for 2015

Tim
nd e to
efu o
Tr No r bt
able
VA ai
h
a
ail efu n a
av nd
efu wit

VA
Tr
ply

nd

efu
m

av
co

nd
ail
to

No r
Time

able

44.27
Post-ling
index score
Tim

ely
14.
e

lik
to

0
c

dit
un

ur
om

ho

t
di
au

s
ply

Au te a
T

ith
CI
w

a
CI
Ta m ple
ud co
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Tim

Cte dIvoire 63
Ecuador
Pressures on government finances leading to increased tax regulation

Pablo Aguirre, PwC Ecuador

With a time to comply of 664 hours, but a number the loss of its oil revenues and the impact of the

of payments sub-indicator of just 8, the Paying
Taxes results for Ecuador continue to reflect a tax
system that is difficult to comply with, despite the
availability of electronic systems for filing and
paying taxes. The current economic backdrop may
however present barriers to improving the system.
Ecuadors fiscal revenue depends greatly on its oil
exports which have been significantly affected
by the global oil price crisis that hit at the end of
2015. The drop in oil prices directly impacted the
countrys trade balance as well as the capacity of the
Government to sustain and finance its infrastructure
and socio-economic agenda. In addition, a sizeable
earthquake seriously affected the coast of Ecuador.
With GDP growth of less than 1% for 2015, and
negative growth projected for 2016, the Ecuadorean
Government has sought, in part, to compensate
664
earthquake with increased tax collection activities
through the implementation of tax reforms including
temporarily increasing the VAT rate from 12% to
14%, raising taxes to support people and areas
affected by the earthquake, providing incentives to
hours
attract foreign and local investment and enacting Ecuador has a
several clarifying regulations. This has created the time to comply
current environment of increased regulation for of 664 hours,
taxpayers and foreign investors. but a number
of payments
Whilst the increased regulatory activity in Ecuador
sub-indicator of
is partly driven by the economic situation of
just 8.
the country, it is also a consequence of the Tax
Authoritys overall strategy to align itself with global
tax positions relating to anti-avoidance provisions,
interest deductibility changes, transfer pricing,
transparency and double non-taxation together with
the promotion of long term and transparent
foreign investment.

Figure 52
Trend in the Paying Taxes sub-indicators for Ecuador since 2004

% / Number of payments Hours

70 700
664 hours
Time to comply
60 600

50 500

40 400

32.5%
30 300 Total Tax Rate

20 200

10 100
8
Number of payments

0 0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

64 Paying Taxes 2017. Country articles

Tax compliance: More than just an
administrative function
This years study showed a slight increase of 10 hours
in the time to comply from 654 in 2014 to 664 for
2015 as taxpayers spend more time computing their
corporate income tax liability because of the new
regulations. This change is particularly important in
that it is a quantitative reflection of the impact on the
taxpayers administrative burden of the tax laws that
came into effect in 2015. This increase has occurred
even though most taxes are filed electronically. New
laws and compliance obligations have also been
enacted in 2016 which may affect the Paying Taxes
sub-indicators in future years.
These changes in tax regulation mean that
companies need to adjust their view of their tax
compliance activities from simply completing
and filing tax returns to being able to thoroughly
substantiate the economic essence of their operations
and provide adequate documentary support to the
Tax Authority when required. Other obligations
include statutory filings, such as the Shareholders
Annex, which requires local taxpayers to disclose
detailed information regarding their shareholders
(local and foreign), corporate structure, and inter-
company relationships.
The integration of the tax function into a companys
overall business strategy is likely to require a shift in
the mindset of many taxpayers an approach that,
whilst intuitive to taxpayers in more sophisticated
tax jurisdictions, is likely to prove challenging within
Ecuadorean business culture.
Anti-avoidance rules:
increasing the Total Tax Rate?
With new limits on tax deductions for certain costs
of transactions with related parties for fiscal year
2015 on, as well as the enforcement of limitations on
the automatic application of benefits under double
taxation treaties, the corporate income tax cost for
This shift in
multinational and local enterprises operating in the taxpayers
Ecuador will be impacted significantly as taxpayers mindset reflects
register increased levels of non-deductible expenses the integration of
arising from their intra-group operations. This is the tax function
likely to result in higher Total Tax Rates for many into a companys
companies in Ecuador that conduct cross-border overall business
trade. These changes however will not be reflected strategy.
in Paying Taxes which considers only domestic
transactions.
The Ecuadorean Tax Authorities have however
sought to offset the increase in the corporate tax
burden by introducing benefits and incentives
to benefit new investment, foreign financing
and companies commencing economic activities
inEcuador.
A new measure for post-filing
With regard to the new post-filing index, Ecuador
has a mixed performance. In common with the
rest of South America, a VAT refund would not be
available to the case study company as VAT refunds
are available only to exporters and certain other
types of company. On the corporate income tax
correction and underpayment, however, Ecuador
performs very well as it would take three hours
to correct the tax return and make the additional
payment and it would be unlikely to give rise to
anaudit.
Looking forward
The on-going challenge for the Tax Authority
will be to find a balance between continuing to
enact its strategy (increase and improve revenue
collection) and stabilising and reducing tax costs and
administrative burdens for taxpayers.

Figure 53
Post-filing index and components for Ecuador for 2015

Tim
nd e to
efu o
Tr No r bt
able
VA ai
h
a
ail efu n a
av nd
efu wit

VA
Tr
ply

nd

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av
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nd
ail
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Time

able

49.31
Post-ling
index score
Tim

ely
e

lik
3.0
to

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dit

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di
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ply

Au te a
T

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Ecuador 65
Hungary
Slow but steady improvements to the tax system

Dora Mathe, PwC Hungary

Between 2004 and 2015, the Paying Taxes sub-
indicators for Hungary have shown slow but
steady improvement. As a result of the Hungarian
governments efforts to make the tax system more
competitive and efficient, Hungary is moving
closer to the EU & EFTA average for Total Tax Rate,
time to comply and number of payments sub-
indicators.
Hungarys Total Tax Rate decreased from 56.6%
in 2004 to 46.5% in 2015; above the average of
40.3% for the EU & EFTA region. In the last six
years, the stated goal of the government has been
to shift the focus of taxation from income tax to
consumption taxes.
For corporate income tax, the first HUF 500 million is
now taxed at 10% (raised from HUF 50 million) while 2004
the general VAT rate has been increased from 25%
to 27% in 2012. The direction of the shift in the tax 56.6%
burden is not expected to change in the near future, 2015
but ultimately the governments goal is to decrease
both the number and the rates of taxes. 46.5%
Decrease in the
The Government is also using the tax system to tackle
several demographic challenges which are outside
Total Tax Rate.
the scope of our case study. Tax incentives have been
introduced for families with children to help combat
issues presented by an aging population and to
acknowledge the importance of families.

Figure 54
Trend in the Paying Taxes sub-indicators for Hungary since 2004

% / Number of payments Hours

70 350

60 300
277 hours
Time to comply
50 250
46.5%
Total Tax Rate
40 200

30 150

20 100

10 50
11
Number of payments

0 0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

66 Paying Taxes 2017. Country articles

Other recent tax related measures seek to address
the lack of skilled workers in certain sectors and
regions including permitting tax deductions
for investments in employee accommodation
and new cafeterias and subsidising employees
mortgage costs.
Hungarys time to comply has fallen by 19%
since the start of the study, largely due to the
introduction and enhancement of an electronic
tax compliance portal. At 277 hours it does,
however, remain more than 100 hours above the
EU & EFTA average of 164 hours.
At 11, the number of payments sub-indicator is
slightly below the EU & EFTA average of 11.8.
Sector specific austerity taxes have, however,
been introduced in recent years, for banks,
insurance companies, energy companies, retailers
and telecommunications companies. These new
taxes are not reflected in the study as they do not
apply to the case study company. The government
has announced its intention to reduce the number
of taxes levied in Hungary.
Post-filing index
Overall, Hungarys post-filing index of 75.79 is
better than the world average, but worse than
the regional (EU & EFTA) average. EU & EFTA is
however the best performing region for the post-
filing index and so sets a high benchmark.
The VAT refund process is likely to trigger an
audit in Hungary. This may account for the time
to comply with a VAT refund being longer than
the world average and almost twice the regional
average. On average though it takes less time to
obtain the VAT refund than in other economies
globally or in EU & EFTA. Our experience is that
an audit would, in many cases, not extend the
time a company has to wait for a VAT refund
inHungary.
Correcting a CIT return, as per the case study
scenario, is thought likely to trigger an audit in
Hungary. Despite this, the time to comply with
a CIT audit is lower than the world average. It is
75.79
higher than the EU & EFTA average, but this is
Hungarys post-
not surprising as in many economies in the EU filing index of
& EFTA the correction does not trigger an audit. 75.79 is better
than the world
The resultant audit would on average be quicker
average.
in Hungary than in other economies globally or in
the EU & EFTA.
While the Paying Taxes data shows improvements
in recent years and the new post-filing index
is relatively good, there is room for further
improvement and the government is making
efforts to speed up tax administration processes
and audits. From 2016, the National Tax and
Customs Authority is able to classify taxpayers as
reliable or risky and the two categories have
different legal consequences. Reliable taxpayers
may benefit from less detailed and shorter audits.
Taxpayers that are not assigned to either category
will continue to be subject to the general rules.
We are expecting further improvements to
electronic systems, as the tax authority is
requesting more and more online information
from taxpayers. Electronic tills and invoicing
software will soon have to be connected to
the tax authorities system in real time. More
transactional information is collected via the VAT
return process, which can be used for automatic
cross checks.

Figure 55
Post-filing index and components for Hungary for 2015

Tim
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ATr tai
V n
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a 13 a
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t

ou
VA
wi

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15
Time

75.79
Post-ling
index score
Tim

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au

8.
h

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Tim e to

Hungary 67
Indonesia
Improvements realised and more to come

Ay Tjhing Phan, PwC Indonesia

Indonesia has been stepping up its tax reform
drive. Tax reforms resulted in the country moving
up the Paying Taxes ranking by 11 places when
looking at the reforms introduced in 2015, but an
improvement of over 40 places when compared
As for the new post-filing index, Indonesia has
a favourable score of 76.49, which is above the Indonesia
average for the Asia Pacific region of 58.53.
76.49
Indonesia operates a self-assessment system. The Asia Pacific

with the published position last year in view of the
implementation of the new post-filing index and
the recognition of efficient post-filing processes.
In 2015, Indonesias number of payments and
time to comply sub-indicators improved to 43
payments and 221 hours respectively, thanks
to the use of electronic social security systems.
Indonesias Total Tax Rate marginally increased
from 29.7% to 30.6% due to the addition of a new
pension contribution with 2% paid by employers.
58.83
tax office generally relies on clarifications from
taxpayers and tax audits to assess the quality of
tax compliance, though tax audits are not applied
in all scenarios. For instance, the correction of an Indonesia has
error in a companys corporate income tax return, a favourable
which had led to a tax underpayment (as is post-filing index
included in the corporate income tax components score of 76.49,
of the post-filing index) would not generally be which is above
expected to trigger an automatic tax audit. the average for
Asia Pacific.

Figure 56
Trend in the Paying Taxes sub-indicators for Indonesia since 2004

% / Number of payments Hours

70 700

60 600

50 500

43
40 400 Number of payments

30 300
30.6%
Total Tax Rate

20 200
221 hours
Time to comply

10 100

0 0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

68 Paying Taxes 2017. Country articles

Efforts to streamline the ease of paying taxes are
not new. There has however been a renewed focus
since President Joko Widodo took office in 2014.
Given the ongoing efforts, the impact of reforms
in 2016 and later, such as compulsory e-payment
for tax liabilities, are not yet included in the
current years Paying Taxes data which relates to
the calendar year ending on 31 December 2015.
The effect of these recent reforms may however
be seen in future years.
The success of the Tax Amnesty Program reflects
the growing trust of taxpayers in the current The success of
Indonesian government. Credit must also be given the Tax Amnesty
to comprehensive communication campaigns Program reflects
nationwide. To date, Indonesias tax-to-GDP ratio the growing trust
remains low (averaging 11%-12%) relative to of taxpayers
the target of 16% by year 2019. To achieve this in the current
goal, Indonesia has to widen and stabilise its
Indonesian
tax net through reform and public education to
government.
encourage more and better tax compliance.

The impact of other key reforms, while far
reaching, are not reflected in the study as they do
not apply to the case study company. For example,
regulations were introduced in 2013 for very
small taxpayers (below the case study threshold)
with qualifying turnover of below IDR 4.8 billion
(about USD 370 thousand) to apply a 1% final tax
to turnover. Targeted measures like this reduce
the burden for corporate income tax calculations
and minimise future disputes for small taxpayers.
In July 2016, Indonesia launched its highly
anticipated Tax Amnesty Program. Over
IDR 3,793 trillion (about USD 291.8 billion) of
assets previously undeclared was reported in
the first trimester of a nine month long program
approximately 95% of an IDR 4,000 trillion
target. More than 392,000 taxpayers participated
in the same period. This provides a substantial
one-off redemption receipt for the government.
It also drastically improves tax literacy among
taxpayers and widens the tax base of declared
assets to improve the quality and coverage of
future tax compliance.
Changes to Indonesias tax system should take
into account the complexities and wide range of
taxpayers in its dynamic economy. Continuing
regular engagement with business communities
and practitioners to receive industry feedback is
therefore key.
Reforms to the general tax administration law,
income tax law and VAT law (among others) are
expected to be debated in the coming months.
On-going professionalism of tax authority staff
has been helpful in improving and increasing
their knowledge of commercial trends and
international tax practices. Additional data
collection and improved processing for more
targeted tax enforcement is another priority
area. Further measures, if adopted, such as the
mandatory use of electronic tax filing could
also further ease the administrative burden of
complying with tax obligations.
We remain encouraged that the government
will be able to build on momentum from the Tax
Amnesty Program and maintain their focus on
the ease of paying taxes to further improve tax
compliance in Indonesia.

Figure 57
Post-filing index and components for Indonesia for 2015

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Tr tai
VA n
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VA
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76.49
Post-ling
index score
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Indonesia 69
Chapter 4
Beyond Paying Taxes:
Tax policy and
administration

70 Paying Taxes 2017.

A role for corporates in
tax system reform
Authors: Amal Larhlid (PwC UK)
and Simon Carey (PwC UK)
Tax and how tax systems operate has moved firmly
up the agenda not only for governments, business
and the media, but also for the general public. The
Paying Taxes indicator provides robust information
which enables tax systems around the world to
be benchmarked. In doing so it provides a tool
which assesses how easy governments make it
for companies to pay their taxes and so can help
to encourage reform and improvement especially
around reducing the administrative burden of
paying taxes and making compliance easier and
more efficient for all.
But governments, particularly in the developing
world, need assistance to make these reforms and
to build effective, efficient tax systems. The private
sector has the potential to offer this assistance
and to play a much greater role in the worldwide
development of strong tax systems; to do more than
just paying its taxes. The private sector has access
to resources, expertise and networks that can make
a valuable contribution to the development of tax
systems and the effective collection of tax revenues,
but for this to happen there needs to be an appetite
to offer such assistance and an acceptance by other
stakeholders that such help is appropriate.
In this article we explore some aspects of corporate
social responsibility and the role it can play in tax
system reform. We identify the main barriers to
effective cooperation in this area and some of the
approaches to overcoming these barriers. This
is based on international literature and insights
gleaned from a series of interviews conducted
with experts from multinational corporations,
international financial institutions, tax authorities
and non-governmental organisations (NGOs)
during 2016. The authors are very grateful for the
valuable insights these interviews provided.
A role for corporates in tax system reform 71
T he field of CSR is not a static set of practices, but a
constantly evolving field which has been largely driven by
business. CR used to be an "add-on," but has evolved to become
a more integrated and disciplined field, increasingly managed
and assessed as any other business function. 39
Camilla Drejer, Corporate Responsibility Group
What do we mean by corporate
social responsibility?
Corporate social responsibility (CSR) is a
concept whereby companies integrate social and
environmental concerns in their business operations
and in their interaction with their stakeholders on a
voluntary basis.40
Over the years, prevailing views on corporate
responsibility have evolved. Companies continue
to search for a competitive edge whilst trying
to respond to new stakeholder demands and to
demonstrate that the two need not be contradictory.
A wider group of stakeholders now take a closer
interest in companies impacts and can influence
how company brands are regarded.
Part of this evolution in CSR can be attributed
to significant shifts in public sentiment. Many
companies now have sophisticated, comprehensive
and publicised CSR strategies, often with a
particular focus on issues like supply chain working
conditions, and some have gone so far as to make
advocacy for social responsibility a key point of
differentiation.
Businesses can be powerful agents of change and
their influence can be significant for economic and
social development. For developing countries in
particular, businesses provide 60% of economic
output and 90% of jobs.41 The Addis Ababa
Action agenda, agreed at the United Nations
Third International Conference on Financing for
Development in 2015, re-emphasised what they
regard as the need for improved domestic resource
mobilisation to widen the revenue base, improve
tax collection and combat tax evasion and illicit
financial flows 42 and highlighted the need for
private business investment to help drive inclusive
economic growth and job creation.
Department for Business, Innovation and Skills 2014. See
39 
page 79 for bibliography.
40
European Commission 2011.
41
OECD 2016a.
42
United Nations 2015.
72 Paying Taxes 2017.
Why would companies get involved?
Many corporations are adopting and For developing
strengthening their CSR strategies in recognition countries in
of a range of benefits for companies; ultimately, particular,
corporates can do well by doing good.43 There businesses
can be lower costs to firms through greater provide 60%
operational efficiencies, reducing waste and
of economic
costly energy consumption and removing
output and 90%
inefficient capital expenditure. For example, in
2006 Wal-Mart reduced transportation costs
ofjobs.
by $3.5 million through one initiative to reduce
packaging on toys.44 CSR strategies that focus on U ltimately,
employees wellbeing and training can help retain
corporates
more workers, enhance overall productivity,
can do well by
mitigate health and safety issues and other risks
to the business.
doing good.
By promoting and adopting considerate and
responsible business attitudes, companies
can engage positively with stakeholders,
regulators and governments which can help
with risk management and mitigation.45 In
addition this can help change a reputation and
can differentiate the business, lead to greater
customer loyalty, stronger client relationships
and create an attractive workplace for employees
which are all indirectly linked to sustainable
business success.46
43
OECD 2016b.
44
Wal-Mart 2006.
45
Kytle and Ruggie 2005.
46
IISD 2016a.
What role does tax play in corporate
social responsibility?
A companys tax strategy can play an important
part in their approach to social responsibility. Tax
raised in a particular country is an important source
of finance for the government, enabling them to
meet economic and social objectives and helping
to secure overall prosperity and stability. While tax
is a cost to business, some say that it could also be
regarded an investment in the societies in which a
company operates.47
In some parts of the world, companies are
increasingly being asked to consider their strategic
approach to tax taking into account a broader
social responsibility agenda. Through social media
and greater financial disclosure there has been
increasing pressure from citizens, governments,
NGOs and the media for companies to think more
broadly when planning their tax affairs to consider
the wider impacts of their decision-making, and to
explain publically the taxes they pay.
Companies may have more to contribute
than just paying their taxes
Companies potentially have more to offer than
the contribution they make through paying taxes.
They can also bring significant expertise and
resource to bear on some of societys biggest issues,
which includes contributing to the development of
effective tax systems and the building of capability
in developing world tax administrations. This
should be possible without compromising their
commercial competitive advantage, provided
certain barriers to their involvement can be
overcome. We consider these barriers and how they
could be addressed in the final section of this article.

This is a particular focus in the developing world,

where tax provides the funds to expand much-
needed public services such as healthcare and
education, and to alleviate deprivation. This
should also be complemented by reforms to combat
corruption and inefficiency in the public sector, to
help ensure the benefits of taxation are accruing to
those most in need.

By promoting and adopting considerate and

responsible business attitudes, companies can
engage positively with stakeholders, regulators and
governments which can help with risk management
and mitigation.

47
Action Aid 2015.

A role for corporates in tax system reform 73

The different perspectives on CSR
Many parties have an interest in corporate social
responsibility including businesses, the media,
professional bodies, trade associations, universities,
research institutes, NGOs, governments, employees
and other groups of citizens and these diverse
groups all have different expectations of what
corporate social responsibility should entail. The
analysis below briefly explores some of these
different perceptions with regard to tax.
Governments
The governments responsibility is to look after
the collective interests of its citizens, providing
an enabling environment for responsible business
and making sure that it is equitably enforced.48
Governments cannot provide for all their citizens
needs alone and must partner with other actors to
leverage key resources. Some have an expectation
that governments should create a responsible and
attractive business environment often a key factor
in a companys decision on whether or not to start
doing business in a country.
In return, governments expect corporates to comply
with their tax obligations. In some developed
countries the input of corporates to the debate
around tax policy is sought although to varying
degrees, and in many developing and emerging
countries governments will also seek the input
of the private sector (either directly, or through
international institutions and aid agencies) to
advise on, and support, major tax system reforms.49
48
OECD 2016c.
See, for example the work programmes of domestic aid agencies DFID, DANIDA and USAID, and international organisations such as the World Bank and
49 
European Commission.
50
IISD 2016b.
51
IISD 2016b.
74 Paying Taxes 2017.
Non-governmental organisations
(NGOs) There is a risk
NGOs play a role in international development and that NGOs
help to draw attention to the impact of businesses support too
on society and the environment, in some cases narrow a view
campaigning against businesses that, in their of the role of
view, could operate differently. The work of some corporates and
NGOs has impacted consumer and governmental discourage
expectations on companies with regard to their them from
approach to tax: Multinational brands have been
supporting tax
acutely susceptible to pressure from activists
development to
and from NGOs eager to challenge a companys
labour, environmental or human rights record.50
their full extent.
This doesnt just impact businesses that are
directly manufacturing or selling highly visible
branded goods it can also affect a broader range of
companies and their stakeholders.51
A common perception among NGOs is that the role
of corporates in supporting tax systems should be
limited to paying taxes in accordance with the spirit
of the law, and should not extend to support with
setting and developing policies that corporates
themselves will eventually have to comply with.
The practical impact of this view is to discourage
the potentially valuable involvement of corporates
in other ways, such as the provision of expertise,
technical assistance and resources.
The international community
The international community the United Nations,
the OECD, the IMF and the World Bank, to name
a few have identified a major role for the private
sector. International agencies themselves play a
vital role in setting expectations for corporates to
contribute to developing the countries in which they
operate through responsible business practices.
They play a key role in reshaping traditional
perceptions of public and private sector roles by
creating the conditions and tools for increased
cooperation, such as common standards and best
practice fora, in order to increase the access to
expertise and information for governments and
businesses to make informed decisions.
The international community also plays a key role
in identifying global trends in foreign investment
and aid, and coordinating global responses to policy
priorities.
The international community also plays a key role
in identifying global trends in foreign investment
and aid, and coordinating global responses to
policy priorities. International organisations expect
companies to support development by respecting
both the letter and spirit of the tax laws and
regulations of the countries in which they operate52
and they may actively seek the input of the private
sector to support tax system reforms.
Companies
Companies contribute to the societies in which they
operate in a number of ways. In terms of public
finances, it is not just taxes on corporate profits
that support public expenditure, but also other
taxes made possible by the economic activity they
generate such as value-added taxes and personal
income taxes. There is now pressure from some
stakeholders that they comply with the spirit and
letter of relevant tax laws, and in many cases this
means an expectation around both tax payments
and the disclosure of relevant financial information.
A potential barrier to companies also contributing
their expertise and resources to improve the local
business environment in the developing world
may be that the benefits of improvements will be
shared with all other businesses (the free rider
problem). However, evidence suggests that these
barriers can be overcome.53 Acting collectively to
provide support and capacity building can diminish
the problem, also providing an opportunity to
strengthen relationships. The reputational benefits
of providing support can also be significant, and
promoting a clear, public CSR strategy can ensure
these reputational benefits are captured by the firm
or firms actually providing the support.
52
OECD 2016c.
53
Porter and Kramer 2002.
How can companies better support
tax reform in developing countries?
A number of tax administrations in the developing
world are looking for financial and expert support
in reforming and strengthening their tax systems.
Some corporates are interested in supporting these
types of reforms but find that it is not always easy
to know how to offer their support in a way that
isnt misinterpreted. These corporate stakeholders
often have interests very closely aligned with
those of the governments and donors, as it is in
their shared interests for countries to have well-
functioning tax and public finance systems where
the infrastructure is properly managed, people
have money to spend and invest, and corruption is
minimised. They also have expertise and financial
resources that can be applied to help tax reform
including the drafting and strengthening of tax
policy, legislation and administration.
Companies involvement with governments of
developing countries has historically been sensitive
due to issues such as perceived conflicts of interest,
criticism for interfering in developing countries tax
affairs, and accusations of corruption and bribery.
These barriers are not insurmountable, and as we
describe below, companies are already beginning
to overcome some of these obstacles in innovative
ways, acknowledging the positive impact that they
can have if involved in the right way.
A role for corporates in tax system reform 75
The table below outlines the main barriers
and potential solutions to cooperation on tax
administration and policy. The list is by no means
exhaustive, but it highlights the extent to which
companies may be deterred from making a valuable
contribution, as well as the ease with which some of
these barriers may be overcome.

Barriers

The free rider Mutual lack of

Procedural barriers
Internal rules and/or
legislation designed to
prevent conflicts of interest
may prevent corporates from
being involved.
Lack of access
problem understanding
No natural forum or
Companies may be reluctant Businesses, governments,
platform for engaging on
to support tax development NGOs and international
issues of tax development
in a context where non- financial institutions may
may exist.
contributors also benefit. not understand each other
sufficiently.

Potential
Revise internal risk solutions
procedures to allow
cooperation by putting
in place appropriate
safeguards (e.g. clear
codes of conduct,
rigorous relationship
checking, understanding
the details of services
proposed and parties
involved/impacted,
and examining and
documenting the nature
of the relationship Build relationships with Frequent and
between entities for the the help of facilitators or constructive multi-
delivery of the services). business advisers. Facilitate collaboration stakeholder policy
Implement processes/ Set up fora for dialogue between corporates, to dialogue to improve
standards for and cooperation encourage a collective understanding and
cooperation developed with representatives approach across an build trust between
by international of different parties, industry, or even more stakeholders.
organisations such including NGOs, tax widely. Formal submissions
as the OECD (e.g. on authorities and other Ensure that the (written and verbal) on
Responsible Business corporates. reputational benefits of potential tax changes.
Conduct) or the Work with, or through, the company supporting Secondments of tax staff
Business and Industry international financial tax development are from companies to tax
Advisory Committee institutions and realised (e.g. through authorities (and vice
(BIAC) framework the international the publication of a clear versa), with appropriate
for stakeholder community. CSR strategy). safeguards.
engagement.54

54
BIAC 2006.

76 Paying Taxes 2017.

 Barriers
Corruption
Lack of trust
Companies may be
Stakeholders may not trust
deterred from working with
one another sufficiently to
governments due to real
cooperate on issues of tax
or perceived corruption
development.
within the bureaucratic or
politicallevels.
Potential
solutions
Ensure all interactions
and arrangements
with the government
are made on a fully
transparent basis.
Cooperate with
international
organisations or other
independent bodies to
Improve corporate mitigate the risks.
transparency and Provide technical
consider what voluntary assistance to support the
disclosure can be made government in the fields
in order to build trust. of governance and anti-
Ensure any interactions corruption.
with the authorities Ensure strong
around tax development, procurement procedures
and the companys to protect the company
intentions, are publically from problematic
disclosed. conflicts of interest
Assess and address the arising through its
developmental impacts interactions with
of tax behaviour. government tax bodies.
The perception of
lobbying
Businesses may be deterred
from providing support
in case it is perceived by
stakeholders as a lobbying
exercise.
Transparent public
disclosure of the
aims and outcomes of
cooperation around tax
and development issues.
Payment by results
approaches can if well
executed provide a
mechanism for aligning
incentives between the
provider of a service/
program and the
contracting authority.
These contracts involve
a success fee, which is
subject to the realisation
of pre-defined objectives
related to the project.
Work with, or
through, international
organisations or wider
industry groups.
A role for corporates in tax system reform
Costs to the business
The cost of providing
support for tax development
may be prohibitive. This
includes financial costs,
staff time and management
resource.
F or some companies
this may be a perceived,
rather than actual,
barrier, as the
improvements to the
business environment
and flow-on implications
for the companys
operations can far
outweigh the costs of
providing support.
Companies may be
able to provide support
in ways that alleviate
their main pressure
points i.e., providing
opportunities for staff
secondments where
financial support is not
possible.
Companies can
encourage others to
participate through the
sharing of best-practice
cooperation examples
and the impact these
have had on the firms
themselves.
77
This demonstrates that the barriers to corporates
supporting the development of sound, well-
functioning tax systems are not insurmountable,
and a number of these potential solutions are
already being utilised by companies and tax
administrations around the world. As a final
point, we highlight two of the key tools being
used to overcome these constraints below.
A number of industry groups have been set up
to overcome these obstacles in a collective way.
One example of this is the Africa Industry Tax
Association (AITA), a group of multinational
corporations with significant operations in Africa.
This group was formed as a structured, collective
platform for engaging with African governments
and revenue authorities on issues around tax
policy, systems and administration, and has an
active working relationship with the African Tax
Administration Forum (ATAF). These groups
may even be formally incorporated into the
consultation processes of other stakeholders as is
the case with the Business and Industry Advisory
Committee to the OECD (BIAC), a group of
multinational businesses who operate as a trusted
partner to the OECD and other international
institutions. Groups like these can be a powerful
tool for promoting dialogue and building trust
between governments and industry around
tax affairs, mitigating the free rider concern
and reducing the perception of lobbying for the
advancement of company-specific benefits.
Concluding remarks
Governments worldwide are looking to their
tax systems to generate the funds necessary to
support vibrant, inclusive societies, but many
countries remain unable to harness the revenues
needed to provide even basic needs for their
populations. Tackling corruption, improving the
tax system, and making it easier for companies
and individuals to pay their taxes are important
roles of government, while companies are
expected to pay their tax when and where it
is due.
In addition to the taxes that a company pays,
there is potential for companies to work in
cooperation with governments and other
stakeholders in support of broader development
goals as well, including a role in the worldwide
development of strong tax systems. The potential
barriers to this cooperation, if addressed properly,
need not prevent the experience, influence and
resourcefulness of the private sector from playing
their part in fulfilling these important goals.

Blended finance is another collaborative approach

to overcoming these barriers. It is defined Tackling corruption, improving the tax
by the World Economic Forum and OECD as system, and making it easier for companies
the strategic use of development finance and and individuals to pay their taxes are
philanthropic funds to mobilize private capital important roles of government, while
flows to emerging and frontier markets.55 At its companies are expected to pay their tax when
core it is a way to channel private investment and where it is due.
into sectors where the development needs are
the greatest, by combining it with development
finance and philanthropic funds to mitigate risk
and ensure commercial returns. International
financial institutions are already operating
models like this as a way to mobilise resources for
their global programmes, including specific funds
established to assist with tax development.
Both these approaches as well as the tools
and approaches listed above are available to
companies and governments looking to overcome
the constraints to greater cooperation around
issues of tax development.56

55
OECD and World Economic Forum 2015.
56 
Examples include a series of multi-donor funds operated by the World Bank, and the IMFs Tax Policy and Administration Topical Trust Fund, launched in
2011 to help meet increased demand for technical assistance from developing countries in the area of revenue policy and administration (see IMF 2016b).

78 Paying Taxes 2017.

Acknowledgements
The authors would like to thank Claire Monari
(PwC UK), Emily Macpherson (PwC UK intern),
Gwendolin Chau (PwC UK) and Neville Howlett
(PwC UK) for their support and contributions,
and the numerous corporate, NGO, government
and international financial institution
representatives for their kind participation in the
interviews that informed this article.
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A role for corporates in tax system reform 79
The rising importance
of consumption taxes in
government tax revenues

80 Paying Taxes 2017

Authors: Jo Bello (PwC UK)
and Haider Hatteea (PwC UK)

Executive Summary Technology is playing an increasingly important

Corporate income tax as a percentage of
governments tax revenues is continuing to
fall at the same time as tax revenues from
indirect taxes such as value-added tax (VAT)57
are increasing. This reflects a global trend
of governments focusing on the certainty of
revenues from VAT and using indirect taxation
to achieve objectives beyond just raising
taxrevenue.
The number of countries around the world
with a VAT system is increasing. VAT in the
OECD countries now accounts for around
20%58 of total tax revenues, a 70% greater
share than in the mid-eighties.59
role in the creation of efficient indirect tax
systems and in improving their effectiveness by
reducing the cost and administrative burden for
both taxpayers and tax authorities. Examples of
this will be seen next year in India where they
will introduce a new goods and services tax and
in Spain which will increase the use of real time
VAT reporting.
Post-filing interactions with tax authorities for
VAT can complicate the compliance process
and increase costs for business. The new
Paying Taxes 2017 post-filing index enables a
comparison of these processes around the world.

Comparing VAT systems across the world

shows that there is a clear tension between
the need to reduce the possibility of non-
compliance and ensuring that the burden
of administration on taxpayers does not
impair businesses competitiveness. There is
some evidence to suggest that more recently
implemented VAT systems in OECD countries
have higher levels of compliance. This is
because a single VAT rate is used with a
broader VAT base with few exemptions. More
research is needed to explore this further.

We have used VAT (value-added tax) to cover similar consumption tax systems such as goods and services tax (GST). The US
57 

system of sales and use taxes is not a VAT (as not collected on the value added at each stage and is essentially collected at a
single stage (retail)) however it remains a tax on consumption and not income.
58
OECD (2015), Revenue Statistics: Comparative tables, OECD Tax Statistics (database).
59
OECD (2014), Consumption Tax Trends 2014 Fig 1.3.

The rising importance of consumption taxes in government tax revenues 81

The EU member states, as well as a number of countries in Africa,
America and Asia-Pacific currently have VAT systems. The Gulf
Cooperation Council (GCC) countries in the Middle East are also looking
to implement VAT over the next few years, and India is still on track to
implement a new GST system to replace its current multiple VAT and sales
tax systems early in 2017.

Consumption taxes, primarily in the form of value- VAT is now the most common form of

added tax, goods and services tax (GST) as well as
sales and use tax (SUT), have grown to be a major
source of tax revenues for governments across
the globe as they begin to appreciate that taxing
consumption provides a more certain tax revenue
stream than taxing income or profit. Governments
worldwide are looking to raise more of their
taxes from indirect taxes, which from a business
perspective should be more neutral than direct
taxes. See Figure 58 which shows that almost 30%
of tax revenues are raised from indirect taxes (VAT
raising around 20% and other indirect taxes such
as excise duties making up the balance) versus tax
revenues from corporate profits at around 10%.60
162
consumption tax used around the world with a
growing number of countries moving from a sales
tax to a VAT system. With 162 economies in the
Paying Taxes 2017 study employing VAT today,61
it is attracting an increased focus from
economies
governments as it is viewed as an efficient and in the Paying
effective method of providing tax revenues that Taxes 2017
governments need without stifling business study employing
growth. Whereas high rates of corporate income VAT today.
tax (or a very extensive tax base) can discourage
investment and provide an incentive to shift
income to lower tax jurisdictions, VAT is generally
neutral in terms of business location decisions
(except where VAT recoveries take too long or are
impossible toachieve).

Figure 58
Tax Structures in OECD economies % of tax receipts categories by revenue source

% of tax receipts
55
Employment and
personal income*
50

45

40

35

30 Consumer
expenditure

25

20

15

Property and other

10

Corporate profits
5

0
1965 1975 1985 1995 2005 2010 2013

Source: OECD Revenue Statistics, 2015 * personal income tax and social security contributions

60
OECD (2015), Revenue Statistics: Comparative tables, OECD Tax Statistics (database).
61
The OECD records 164 economies with VAT systems in its 2014 edition of Consumption tax trends. This includes economies that are not in the Paying Taxes
2017 study.

82 Paying Taxes 2017

What are the differences between the
types of consumption taxes, VAT, GST
and SUT?
VAT and GST are designed to be a tax on final
consumption. They are collected throughout the
supply chain through a staged collection process.
VAT and GST are levied on the supply of goods and
services, as well as on the importation of goods
and services. As a general principle, VAT and GST
are imposed at every stage of the economic process
and allow deduction of taxes on purchases by all
but the final consumer, subject to some exceptions.
The net effect of this is to spread the collection
of the tax as buyers, suppliers, and consumers
contribute only the incremental value they have
provided in the supply chain under a credit or debit
system where VAT/GST incurred on purchases is
offset against the VAT/GST due on sales.
The EU member states, as well as a number of
countries in Africa, America and Asia-Pacific
currently have VAT systems. The Gulf Cooperation
Council (GCC) countries in the Middle East are
also looking to implement VAT over the next few
years, and India is still on track to implement a new
GST system to replace its current multiple VAT and
sales tax systems early in 2017.
62
The Anatomy of the VAT Michael Keen IMF paper 13/111.
In comparison to mature VAT systems, such as
in the EU, where newer VAT systems have been
introduced, for example in Australia, New Zealand
and Singapore, these countries apply VAT at a
single rate of tax to a broad base of consumer
spending, with few exemptions, and as a result
are characterised by having a higher degree of
compliance (and by implication a reduced cost of
compliance for the taxpayer, i.e., the business) and
sustained revenue raising.62 The EU VAT model
has been part of the tax landscape in Europe since
the first VAT Directive was adopted on 11 April
1967, and is characterised by having a far narrower
tax base (due to the high use of exemptions and
zero-ratings) which renders the EU VAT system
more complex for business and tax administrations
and increases the costs of compliance for both. It
should be noted however that the Paying Taxes
2017 studys simple fact pattern is not able to
provide support for this position; further work will
be undertaken to investigate this.
Whilst a VAT system requires all parties in the
supply chain to collect and remit (a part of) the tax,
this indirect tax system is often viewed as less open
to fraud than retail sales taxes such as SUTs, for
example, as in the US, which are collected in their
entirety at the point of sale on the last sale in the
supply chain (i.e., the retailer to consumer). In this
regard, although both VAT and SUT are designed
to tax the final consumption of a wide range of
products, in practice, SUT places reliance on either
the final supplier or end consumer remitting the
entirety of the tax. To reduce the cascade effect
of such taxes, an exemption certification is often
required through the supply chain. As a result of
the non-compliance risks associated with the sales
tax system, this can result in the tax revenue being
at risk if either party is unaware of or does not fulfil
its reporting obligations particularly in the case
of the final transaction with the end consumer.
The US is currently the only OECD country which
employs SUTs as its principal tax on consumption.
The rising importance of consumption taxes in government tax revenues 83
The spread of VAT/GST The VAT compliance burden

systems globally
The number of VAT systems in the Paying Taxes
2017 study has continued to increase, rising
from 153 economies in 2010 to 162 economies
in 2015.63 Some of these are a new tax and
some a replacement for other narrower forms
of consumption tax. Some examples of how
VAT systems are developing include Chinas
accelerated transition from business tax to a
VAT system from 2012 which was substantially
completed in 2016, the introduction of VAT in
Malaysia on 1 April 2015 (which replaced its Sales
and Services Tax system), and Egypts transition
to a full VAT system in September 2016. VAT in
the OECD countries now accounts for around 20%
of total tax revenues, a 70% greater share than in
the mid-eighties.
With the new GST expected to be implemented in
India in April 2017 and the introduction of VAT
in the GCC countries expected to occur in 2018,
the number of countries with a VAT based system
will continue to rise in the coming years. This
will present a number of challenges as businesses
operating in these markets adapt to a new tax
system and consider the need to introduce
automated tools to help them comply.
This need for bedding-in a new VAT system is
evidenced in the Paying Taxes 2017 study by the
introduction of VAT in The Bahamas in January
2015, where the time to comply for the case study
company in dealing with consumption taxes
increased the most by 157 hours as businesses
adjusted to a new tax regime and the inherent
additional processes. Similarly, Malaysian
businesses time to comply for consumption taxes
also increased by 58 hours and demonstrates the
many challenges businesses can initially face
when tax authorities change existing tax regimes.
24
It is inherent in the way VAT is collected that
businesses are unpaid tax collectors, as all parties
in the supply chain are responsible for the extra hrs
VAT accounting required. This burden includes
the cost of raising VAT invoices (in a VAT system) It is interesting
for each supply made, the cost of preparation that the global
and submission of VAT returns, and the frequent
average time
payment of the VAT due.
to comply with
Variations in the time to comply (and the
consumption
complexity of the compliance process) can even taxes in the
arise within a region where countries share the Paying Taxes
same underlying framework and compliance study has fallen
requirements. For example, in EU member states, from 123 hours
where there is a common legal framework for in 2004 to 99
the VAT system,65 the time needed annually to hours in 2015,
comply with the VAT obligations varies in the for the case
Paying Taxes 2017 study. The range is from 30 study company.
hours in Ireland to complete, submit and file a
VAT return to 96 hours in Hungary. This may in
part be explained by the difference in the level of
information reported on the VAT return, where
there is only a requirement to report VAT on sales
and purchases and trade with other EU member
states on the Irish VAT return, compared to up
to 99 boxes to complete on the Hungarian VAT
return. The amount of information and data on a
VAT return may not just reflect the complexity of
the system itself but in addition the use to which
tax administrations put the data collected, e.g.
desk based reviews and risk analyses.

There is also a rising number of countries with

existing VAT based systems which have raised
their standard rate at least once since 2010 (in
the period 2008-2010, 13 countries out of the
then 27 member states in the EU increased their
rates)64 due to financial consolidation pressures
caused by the global financial crisis. This resulted
in businesses being required to adapt their IT
systems and prices in advance of these changes
creating additional compliance burdens.

63
Paying Taxes 2017.
64
The Anatomy of the VAT Michael Keen IMF paper 13/111.
65
Directive 2006/112/EC

84 Paying Taxes 2017

Whilst the complexity of the legislative regime
has to be absorbed by businesses and the actual
time taken to comply will vary with the size of
the organisation, it should be welcomed that
an increasing number of tax authorities are
implementing ways to reduce the compliance and
administration costs falling on business.
It is interesting that the global average time to
comply with consumption taxes in the Paying
Taxes 2017 study has fallen from 123 hours in
2004 to 99 in 2015 while the number of payments
sub-indicator for other taxes (which includes
consumption taxes) has fallen from 16.1 to 12.5.
These falls reflect the introduction and increased
use of electronic filing and payment systems and
also changes to the frequency of filing returns and
the supporting information required.
Note however, the burden of compliance must be balanced with the neutrality of the VAT system when determining the frequency
66 
of filing and the increased fraud risk.
In the most recent year of the study, 2015, the
most significant reductions in the time to comply
in relation to consumption taxes were seen in
Brazil, Vietnam, Senegal, Algeria and Albania,
while in Tajikistan the payments sub-indicator
fell significantly by 5. All of these countries made
changes to their tax systems to assist in making
it easier to comply with their consumption tax
obligations:
Brazil has benefitted from the introduction
of electronic systems which are being used
more widely for preparing, filing, and paying
VAT. Albania has also introduced an on-line
platform for the submission of VAT returns.
Improvements to supporting accounting
software have been seen in Senegal and
Algeria. Albania has also enabled accounting
software to be integrated with the online
platform mentioned above.
In Tajikistan taxpayers now have the ability to
maintain and file VAT invoices electronically.
In Vietnam it is now possible to file VAT
returns on a quarterly basis.66
There is also a rising number of countries
with existing VAT based systems which have
raised their standard rate at least once
since 2010.
The rising importance of consumption taxes in government tax revenues 85
The Paying Taxes 2017 study has shown this
year that governments around the world
continue to implement reforms to improve
how easy it is to comply with VAT systems.
Post-filing information
VAT is attracting more attention from tax authorities
across the world due to its potential to be a simple
and efficient means of tax collection and an
important source of revenue for governments. SUT
has its limits as it is not, unlike VAT, self-controlling
and this explains in part why most SUT rates are
far lower than VAT rates. Tax authorities are, in
addition, increasing and improving their audit
procedures in order to ensure that the correct
amount of tax is paid at the right place and at the
right time.
Whilst businesses have an element of control over
the preparation and submission of VAT returns
depending on the effectiveness of their tax function
and the optimisation of the VAT technology used,
the interactions which can potentially take place
with a tax authority, for example, following a
VAT refund claim can significantly complicate
the compliance process and increase costs for
businesses. In this regard, it is common in a number
of jurisdictions that businesses seeking a refund of
VAT can expect to be subject to an audit. With this in
mind the fourth sub-indicator, the post-filing index,
has been introduced to the Paying Taxes 2017 study
this year which in part looks at VAT and dealing
with a VAT refund claim.
86 Paying Taxes 2017
VAT refund mechanism
7.9 hrs
It is common for the majority of VAT registered
businesses to be in a VAT payment position. There
are however occasions where businesses may be
in a VAT repayment position. This can arise for a is the average
variety of reasons ranging from businesses being time it takes
involved in export transactions where zero-rating or the case study
exemption from charging VAT is available or when company to
companies make one-off large capital investments comply with a
resulting in input taxes on purchases exceeding the VAT refund in
tax on sales for one or several periods. high income
economies
The mechanism by which VAT is refunded is an
compared with
essential part of the VAT system. It is interesting
to note, however, from the analysis carried out
in Paying Taxes 2017 that of the 162 economies 26.9 hrs
identified which had a VAT system in 2015, only 93 in low income
gave the facility for a VAT refund under the case economies.
study company scenario where VAT is payable on
the purchase of capital equipment.
In 22 of the 162 economies which have VAT,
taxpayers are required to carry forward the excess
input tax for at least two months before a cash
refund can be requested. In these 22 economies
the average period of time needed before a request
can be made for a cash refund is nearly five months,
ranging from two months in Bulgaria, Seychelles
and Tonga to twelve months in Vietnam.
In general, the ability to receive a VAT refund is
challenging or, non-existent in certain countries in
Africa, Asia Pacific, South America, Central America
and the Caribbean. This primarily arises either
because:
the ability to claim a refund is restricted
to specific categories of taxpayers such as
international businesses involved in export
transactions; or
there is no mechanism to refund the VAT.
Where a business is unable to obtain a VAT refund,
there is a clear cost to the business. Our practical
experience of this is that the cost can be so
significant as to make transactions uncommercial
and thus, business will often move, stop or change
the transaction they carry out in a country where
VAT recovery is potentially a problem or impossible.
On average, the Paying Taxes 2017 study finds
that the EU performs the best on the post-filing
index which includes 7.4 hours as the average time
needed to comply with VAT refund requirements
and 14.7 weeks to receive the refund.67 This can be
attributed to the existing legal framework in place
and the work undertaken by the EU Commission to
both simplify the VAT system and ensure refunds
are processed in a timely manner even to taking
legal action. Also of note is that the EU is one of the
few regions which allows non-resident businesses
(both other EU Member States and non-EU
territories) to recover VAT incurred there (in certain
circumstances).
Notwithstanding that 46% of the economies in
the EU do not systematically undertake an audit
as part of the VAT refund request procedure, the
time to comply and the time to obtain the VAT
refund are lower than the global average. This
can be contrasted with the position in the Central
America & the Caribbean region where, on average,
it takes the longest time to obtain a VAT refund
with businesses having to spend 19.6 hours on
compliance and waiting 34.7 weeks to receive
therefund.
Austria is shown to have the most efficient VAT
refund system: the likelihood of receiving a VAT
audit is low for our case study company in Austria
and the time frame in which a VAT refund can
expect to be received is also the shortest across all
countries (approximately 3.2 weeks). This may,
in part, be attributable to the Austrian Ministry of
Finance being one of the first tax authorities to use
a standard audit file format (Standard Audit File for
Tax (SAF-T)) for the electronic exchange of reliable
accounting data from organisations to a national
taxauthority.
67
 lease note that these averages are for the EU only. Paying Taxes 2017 refers to EU & EFTA which includes Iceland, Norway,
P
Switzerland and San Marino.
When comparing the VAT refund process across the
levels of economic development around the world,
on average it takes less time to comply with a VAT
refund in high income economies where it takes 7.9
hours for the case study company compared with
26.9 hours in low income economies. Furthermore,
it takes 15.6 weeks to receive the refund in high
income economies compared with 28.3 weeks in
low income economies.
Some conclusions, and what next
Indirect taxation is increasingly being seen by
governments as a cost effective way to raise
taxation and has (as compared to corporate
taxation) less of an impact on business
performance and the relative attractiveness of a
location.
The Paying Taxes 2017 study has shown this year
that governments around the world continue to
implement reforms to improve how easy it is to
comply with VAT systems, but there continues to
be a wide variety of complexity in VAT systems
even between neighbours. There is also a general
correlation between the efficiency and speed of
the repayment of refund claims and a countrys
general level of economic development.
There appears to be a correlation between a
broad based single rate system and the level of
compliance by business, with newer systems
often inherently less complex thereby being
easier to comply with. However further research
is required to provide evidence of this as it is
currently beyond the scope of the Paying Taxes
2017 study scenario due to its simple fact pattern.
Overall the aim should be to have simple
systems which make the best use of information
technology to minimise compliance times and the
data elements required to find the right balance
between reducing the burden of data provision
requirements and the opportunity for fraud.
There are many questions to consider as VAT
systems evolve and governments seek to find the
right balance is all data collected by authorities
actually effective in the fight against fraud? Is
some data more important than others? Does a
high quantity and frequency of data collection
increase or reduce fraud in a country? What
kind of automation and technology introduced
by tax authorities will help reduce the time to
comply and can it help in reducing fraud? Over
the coming months we will be conducting further
research to address these questions.
The rising importance of consumption taxes in government tax revenues 87
Appendix 1

Methodology and example

calculations for each of the
Paying Taxes sub-indicators

88 Paying Taxes 2017. Appendix 1

Paying Taxes records the taxes and mandatory
contributions that a medium-size domestic
company must pay in a given year, as well as
measuring the administrative burden of paying
taxes and contributions and complying with
post-filing processes. The project was developed
and implemented as part of the Doing Business
project by the World Bank Group in cooperation
with PwC. Taxes and contributions measured
include corporate income and other profit taxes,
social contributions and labour taxes paid by
the employer, property taxes, property transfer
taxes, dividend tax, capital gains tax, financial
transactions tax, waste collection taxes, vehicle
and road taxes, and any other small taxes or fees.
Paying Taxes measures all taxes and contributions
that are mandated by government (at any level
federal, state or local) and that apply to the
standardised business and have an impact on
its financial statements. In doing so, Paying
Taxes goes beyond the traditional definition of a
tax. As defined for the purposes of government
national accounts, taxes include only compulsory,
unrequited payments to general government.
Paying Taxes departs from this definition because
it measures imposed charges that affect business
accounts, not government accounts, with the
main difference relating to labour contributions.
The Paying Taxes measure includes government-
mandated contributions paid by the employer
to a requited private pension fund or workers
insurance fund. The indicator includes, for
example, Australias compulsory superannuation
guarantee and workers compensation insurance.
For the purpose of calculating the Total Tax Rate
(defined later on), only taxes borne are included.
For example, value-added taxes are generally
excluded (provided they are not irrecoverable)
because they do not affect the accounting profits
of the business that is, they are not reflected
in the income statement. They are, however,
included for the purpose of the compliance
measures (time and payments), as they add to the
burden of complying with the tax system.
The Paying Taxes study uses the Doing Business
case study scenario to measure the taxes and
contributions paid by a standardised business and
the complexity of an economys tax compliance
system. This case study scenario uses a set of
financial statements and assumptions about
transactions made over the course of the year.
In each economy, tax experts from a number of
different firms (including PwC) compute the Paying Taxes
taxes and mandatory contributions due in their measures all
jurisdiction based on the standardised case taxes and
study facts. Information is also compiled on the contributions
frequency and method of filing and payments, that are
as well as on the time taken to comply with tax mandated by
laws in an economy, the time taken to request and government
process a VAT refund claim and the time taken
(at any level
to correct a minor error in the corporate income
federal, state or
tax return including audit, if applicable. To make
the data comparable across economies, several local) and that
assumptions about the business and the taxes and apply to the
contributions are used. standardised
business and
Assumptions about the business have an impact
The business: on its financial
Is a limited liability, taxable company. If there statements.
is more than one type of limited liability
company in the economy, the limited liability
form most common among domestic firms is
chosen. The most common form is reported by
incorporation lawyers or the statistical office.
Started operations on 1 January 2014. At that
time the company purchased all the assets
shown in its balance sheet and hired all its
workers.
Operates in the economys largest business
city and the second largest business city for
large economies, defined as those with a
population of more than 100 million. These
economies comprise: Bangladesh, Brazil,
China, India, Indonesia, Japan, Mexico,
Nigeria, Pakistan, the Russian Federation, and
the United States.
Is 100% domestically owned and has five
owners, all of whom are individuals.
At the end of 2014, has a start-up capital of
102 times income per capita.
Performs general industrial or commercial
activities. Specifically, it produces ceramic
flowerpots and sells them at retail. It does
not participate in foreign trade (no import or
export) and does not handle products subject
to a special tax regime, for example, alcohol or
tobacco.
At the beginning of 2015, owns two plots
of land, one building, machinery, office
equipment, computers and one truck and
leases one truck.
Methodology 89
 Does not qualify for investment incentives or
any benefits apart from those related to the
age or size of the company.
Has 60 employees four managers, eight
assistants and 48 workers. All are nationals,
and one manager is also an owner. The
company pays for additional medical
insurance for employees (not mandated by
any law) as an additional benefit. In addition,
in some economies reimbursable business
travel and client entertainment expenses are
considered fringe benefits. Where applicable,
it is assumed that the company pays the fringe
benefit tax on this expense or that the benefit
becomes taxable income for the employee.
The case study assumes no further salary
additions for meals, transportation, education
or others. Therefore, even when such benefits
are frequent, they are not added to or removed
from the taxable gross salaries to arrive at the
labour tax or contribution calculation.
Has a turnover of 1,050 times income
percapita.
Makes a loss in the first year of operation.
Has a gross margin (pre-tax) of 20% (that is,
sales are 120% of the cost of goods sold).
Distributes 50% of its net profits as dividends
to the owners at the end of the second year.
Sells one of its plots of land at a profit at the
beginning of the second year.
Is subject to a series of detailed assumptions
on expenses and transactions to further
standardise the case study. All financial
statement variables are proportional to
income per capita. For example, the owner
who is also a manager spends 10% of income
per capita on travelling for the company (20%
of these owners expenses are purely private,
20% are for entertaining customers and 60%
for business travel).
Table 1
Costa Rica: Number of payments
Tax type
General sales tax (GST)
Corporate income tax
Employer paid social security contributions
Employee paid social security contributions
Employer paid workers insurance contribution
Municipal patent licence
Tax on land property
Highway tax
Property transfer tax
Stamp duty
Total
90 Paying Taxes 2017. Appendix 1
Assumptions about the taxes
andcontributions
All the taxes and contributions recorded are
those paid in the second year of operation
(calendar year 2015). A tax or contribution is
considered distinct if it has a different name
or is collected by a different agency. Taxes and
contributions with the same name and agency,
but charged at different rates depending on
the business, are counted as the same tax or
contribution.
The number of times the company pays taxes
and contributions in a year is the number of
different taxes or contributions multiplied by
the frequency of payment (or withholding) for
each tax. The frequency of payment includes
advance payments (or withholding) as well as
regular payments (or withholding).
The Paying Taxes sub-indicators
Tax payments
The tax payments sub-indicator reflects the total
number of taxes and contributions paid, the
method of payment, the frequency of payment,
the frequency of filing and the number of agencies
involved for this standardised case study company
during the second year of operation. It includes
taxes withheld by the company, such as sales
tax, value-added tax and employee-borne labour
taxes. These taxes are traditionally collected by
the company from the consumer or employee on
behalf of the tax agencies. Although they do not
affect the income statements of the company, they
add to the administrative burden of complying
with the tax system and so are included in the tax
payments measure.
The number of payments takes into account
electronic filing. Where full electronic filing and
payment is allowed and it is used by the majority
of medium-size businesses, the tax is counted as
paid once a year even if filings and payments are
more frequent. For payments made through third
parties, such as tax on interest paid by a financial
institution or fuel tax paid by a fuel distributor,
only one payment is included even if payments
are more frequent. Costa Rica is used as an
example in Table 1.
World Bank indicator Actual payments Notes
1 12 online
1 4 online
1 12 online
0 12 jointly
1 1
1 4 online
1 4 online
1 1
1 1
1 1
9 52
Time
Time is recorded in hours per year. The sub-
indicator measures the time taken to prepare,
file and pay three major types of taxes and
contributions: corporate income tax, value added
or sales tax, and labour taxes, including payroll
taxes, social contributions and personal income
tax. Preparation time includes the time to collect
all information necessary to compute the tax
payable and to calculate the amount payable. If
separate accounting books must be kept for tax
purposes or separate calculations made the
time associated with these processes is included.
This extra time is included only if the regular
accounting work is not enough to fulfil the tax
accounting requirements. Filing time includes the
time to complete all necessary tax return forms
and file the relevant returns at the tax authority.
Payment time considers the hours needed to make
the payment online or in person. Where taxes
and contributions are paid in person, the time
includes delays while waiting. Ecuador is used as
an example in Table 2.
Total Tax Rate
The Total Tax Rate measures the amount of
taxes and mandatory contributions borne by
the business in the second year of operation,
expressed as a share of commercial profit. Paying
Taxes 2017 reports the Total Tax Rate for calendar
year 2015. The total amount of taxes borne is the
sum of all the different taxes and contributions
payable after accounting for allowable deductions
and exemptions. The taxes withheld (such as
personal income tax) or collected by the company
and remitted to the tax authorities (such as value-
added tax, sales tax or goods and service tax) but
not borne by the company are excluded. The taxes
included can be divided into five categories: profit
or corporate income tax, social contributions and
labour taxes paid by the employer (in respect of
which all mandatory contributions are included,
even if paid to a private entity such as a requited
pension fund), property taxes, turnover taxes and
other taxes (such as municipal fees and vehicle
and fuel taxes).
The Total Tax Rate is designed to provide a
comprehensive measure of the cost of all the taxes
a business bears. It differs from the statutory
tax rate, which merely provides the factor to be
applied to the tax base. In computing the Total
Tax Rate, the actual tax payable is divided by
commercial profit.

Table 2
Ecuador: Time to comply (hours)
Corporate Labour Consumption
Tax type income tax taxes tax Total
Compliance process
Preparation
Data gathering from internal sources (for example accounting records) if held 5 25 30
Additional analysis of accounting information to highlight tax sensitive items 5 25 30
Actual calculation of tax liability including inputting data into software/
15 50 30
spreadsheets or hard copy records
Time spent maintaining/updating accounting systems for changes in tax rates
5 - 30
and rules
Preparation and maintenance of mandatory tax records, if required 10 50 20
Other activities undertaken to comply with tax regulations in local economy:
48 6 0
Transactional annex to be filed on a monthly basis
Total 88 156 140 384
Filing
Completion of tax return forms 18 81 55
Time spent submitting forms to tax authority, which may include time for
2 24 15
electronic filing, waiting time at tax authority office etc.
Total 20 105 70 195
Payment
Calculations of tax payments required including, if necessary, extraction of
4 23 10
data from accounting records
Analysis of forecast data and associated calculations if advance payments are
4 20 10
required
Time to make the necessary tax payments, either online or at the tax authority
2 2 10
office (include time for waiting in line and travel if necessary)
Total 10 45 30 85
Grand total 118 306 240 664

Methodology 91
Commercial profit is essentially net profit before
all taxes borne. It differs from the conventional
profit before tax, reported in financial statements.
In computing profit before tax, many of the taxes
borne by a firm are deductible. In computing
commercial profit, these taxes are not deductible.
Commercial profit therefore presents a clear
picture of the actual profit of a business before
any of the taxes it bears in the course of the
fiscalyear.
Commercial profit is computed as sales minus
cost of goods sold, minus gross salaries, minus
administrative expenses, minus other expenses,
minus provisions, plus capital gains (from
the property sale), minus interest expense,
plus interest income and minus commercial
depreciation.
The methodology for calculating the Total Tax
Rate is broadly consistent with the Total Tax
Contribution framework68 developed by PwC and
the calculation within this framework for taxes
borne. But while the work undertaken by PwC is
usually based on data received from the largest
companies in an economy, Doing Business focuses
on a case study for a standardised
medium-size company.
Since Paying Taxes 2014, fuel tax has not been
considered for the purpose of the Total Tax
Rate calculations because of the difficulty of
computing these taxes in a consistent way across
all of the economies covered. The amounts
involved are also in most cases very small. Fuel
taxes continue to be counted in the payments
sub-indicator.

To compute the commercial depreciation, a

straight-line depreciation method is applied, with
the following rates: 0% for the land, 5% for the
building, 10% for the machinery, 33% for the
computers, 20% for the office equipment, 20%
for the truck and 10% for business development
expenses. Commercial profit amounts to 59.4
times income per capita. Cte dIvoire is used as
an example in Table 3.

Table 3
Cte dIvoire: Total Tax Rate
CFA '000 CFA '000
Profit before tax (PBT) 20,786

Add back above the line taxes borne

Tax on money market account interest 153

Social security contributions paid by employer 7,519
Payroll tax paid by employer 913
Tax on insurance premium 121
Business licence tax 3,761
Real estate tax on developed land 460
Real estate tax on undeveloped land 274
Advertising tax 192
Special tax on equipment 639
Real estate transfer tax 1,314
15,346
Commercial profit (profit before all taxes borne) 36,132
Corporate income tax on PBT after necessary adjustments (3,194)
Above the line taxes borne (15,346)
Total taxes borne (18,540)
Profit after tax 17,592
Total Tax Rate = total taxes borne/commercial profit 51.31%

68
www.pwc.com/totaltaxcontribution

92 Paying Taxes 2017. Appendix 1

Post-filing index
The post-filing index measures two processes
based on four components time to comply
with a VAT or GST refund, time to obtain VAT or
GST refund, time to comply with the correction
of an inadvertent corporate income tax error
and the time to complete a corporate income
tax audit if required. If both VAT (or GST) and
corporate income tax apply, the post-filing index
is the simple average of the distance to frontier
scores for each of the four components. If only
VAT (or GST) or corporate income tax applies,
the post-filing index is the simple average of the
scores for only the two components pertaining
to the applicable tax. If neither VAT (or GST)
nor corporate income tax applies, the post-filing
index is not included in the ranking of the ease of
paying taxes.
The value of each component is transformed
into a distance to frontier score between 0 and
100 as explained later in this section. A score of
100 represents the most efficient process and a
score of 0 the least efficient process. The overall
post-filing index distance to frontier score is the
average of the component scores.
The index is based on two additional
separate scenarios for the case study with the
followingassumptions.
Assumptions about the VAT refund
process
In June 2015, TaxpayerCo. makes a large
capital purchase: one additional machine for
manufacturing pots.
The value of the machine is 65 times income
per capita of the economy.
Sales are equally spread per month (that is,
1,050 times income per capita divided by 12).
Cost of goods sold are equally expensed per
month (that is, 875 times income per capita
divided by 12).
The seller of the machinery is registered for
VAT or goods and services (GST).
Input VAT will exceed output VAT in
June2015.
Excess input VAT incurred in June will be fully
recovered after four consecutive months if
the VAT rate is the same for inputs, sales and
the machine and the tax reporting period is
everymonth.
Assumptions about the corporate income
tax audit process
An error in the calculation of the income tax
liability (for example, use of incorrect tax
depreciation rates, or incorrectly treating
an expense as tax deductible) leads to an
incorrect income tax return and consequently
an underpayment of corporate income tax.
TaxpayerCo. discovered the error and
voluntarily notified the tax authority of the
error in the corporate income tax return.
The value of the underpaid income tax liability
is 5% of the corporate income tax liability due.
TaxpayerCo. submits the corrected
information after the deadline for submitting
the annual tax return, but within the tax
assessment period.
Time to comply with a VAT refund
Time is recorded in hours and covers two
elements:
The process of claiming a VAT or GST
refund, including time spent by
TaxpayerCo. on:
gathering VAT information from internal
sources;
any additional analysis of accounting
information;
calculating the VAT refund amount;
preparing the VAT refund claim;
preparing any additional documents
needed to substantiate the VAT refund
claim;
making representation at the tax office, if
required; and
completing any other mandatory activities
or tasks associated with the VAT or GST
refund.
The process of an audit (if the case scenario
is likely to trigger an audit), including time
spent by TaxpayerCo.in:
gathering information required by the
taxauditor;
preparing any documentation (information
such as receipts, financial statements, pay
stubs) as required by the tax auditor; and
submitting the documents requested by
theauditor.
Methodology 93
Some specific points to note:
A total estimate of zero hours is recorded if
the process of claiming a VAT or GST refund is
done automatically within the standard VAT
or GST return without the need to complete
any additional section or part of the return,
no additional documents or tasks are required
as a result of the input tax credit and the case
scenario is unlikely to trigger an audit. Where
taxpayers are required to submit a specific form
or additional documents for a VAT refund request,
it is assumed that these are submitted at the same
time as the VAT return.
Where an audit is thought likely to take place, an
estimate of half an hour is recorded if documents
are submitted electronically in a matter of
minutes. An estimate of zero hours is recorded
if documents are submitted in person at the
taxpayers premises during a field audit.
See Indonesia as an example of compliance time
for a VAT refund in Table 4.
Time to obtain a VAT refund
Time is recorded in weeks. Time measures the
total waiting time to receive a VAT or GST refund
from the moment the request has been submitted.
The time includes an average waiting time to
submit the refund claim. This is equal to half
the time between the filing of VAT returns. For
example, the waiting time is half a month if the
VAT or GST return is filed monthly, and three
months if the VAT or GST return is filed every
sixmonths.
Time includes the mandatory carry forward
time before a VAT refund in cash can be paid.
The carry forward time is zero if there is no
mandatory carry forward period.
If the case scenario is likely to trigger an audit,
time also includes:
time spent by TaxpayerCo. interacting with
the auditor from the moment an audit begins
until there are no further interactions between
TaxpayerCo. and the auditor (including
the various rounds of interactions between
TaxpayerCo. and the auditor); and
time spent waiting for the tax auditor to issue
the final tax assessment from the moment
TaxpayerCo. has submitted all relevant
information and documents and there are no
further interactions between TaxpayerCo. and
the auditor.

As an example, Table 5 shows the calculation of

the time to obtain a VAT refund for Indonesia.

Table 4
Indonesia, Jakarta: Time to comply with a VAT refund (hours)
Time spent gathering information from internal sources, including analysis of accounting information and
0
calculation of the VAT refund amount
Preparing the refund claim 0
Preparing documents to substantiate the claim for the refund 4
Time spent making representations at the tax office 0
Completing any other mandatory activities or tasks associated with the refund including responding to any
0
resultant audit
If the refund triggers an audit:
Gathering information and preparing documentation as required by the tax auditor 12
Time spent submitting documents requested by the tax auditor 2
Total 18

Table 5
Indonesia, Jakarta: Time to obtain a VAT refund (weeks)
Time waiting for submitting the refund claim (monthly) 2.2
Mandatory carry forward period 0
Interacting with the tax auditor since the audit begins until there are no further interactions 25.7
Waiting for the tax auditor to issue the final tax assessment from the moment there are no further interactions
3.0
between the taxpayer and the tax authority
Total 30.9

94 Paying Taxes 2017. Appendix 1

As for the other components of the post-
filing index, the time to obtain a VAT refund
is converted into a distance to frontier score
between 0 and 100. A score of 100 represents the
most efficient process and a score of 0 the least
efficient process.
Economies that are not scored for the VAT
post-filing components
There are some instances where the case study
company is not scored on the two components for
a VAT or GST refund process:
If an economy does not have a VAT or GST;
If an economy has a VAT or GST, but the
purchase of a machine is not subject to VAT; or
If an economy has a VAT or GST that was
introduced in calendar year 2015, but there is
insufficient data to assess the refund process.
Economies that receive a score of zero for
the VAT post-filing components
There are some instances where an economy has
a VAT or GST system, but the refund will not be
available to TaxpayerCo. for one of the following
reasons:
the ability to claim a refund is restricted to
specific categories of taxpayers that do not
include TaxpayerCo.;
TaxpayerCo. is eligible to claim a refund, but
cash refunds do not occur in practice;
There is no refund mechanism in place;
Input tax on a capital purchase is a cost on the
business; and
TaxpayerCo. must carry forward the excess
input tax for four months or more before a
cash refund can be requested.
If any of these scenarios apply, the economy will
receive a distance to frontier score of zero for both
VAT components of the post-filing index.
Table 6
Hungary: Time to comply with a CIT audit
Information gathering and document preparation required to notify the tax authorities
Submission of relevant documents required for the correction
Time spent making payments
If the correction triggers an audit, time is spent on:
Gathering information and preparing documents as required by the tax auditor
Submission of documents requested by the tax auditor
Total
Economies will also receive a distance to frontier
score of zero for a component if the time for that
component falls within the top (most time-
consuming) 5% of data for that component.
Time to comply with corporate income
tax audit
Time is recorded in hours. The indicator has
two parts:
The process of notifying the tax authorities
of the error, amending the return and
making additional payment, including time
spent by TaxpayerCo.:
gathering information;
preparing the documents required to
notify the tax authorities;
submitting the documents; and
making the additional tax payment.
The process of an audit (if the case scenario
is likely to trigger an audit), including time
spent by TaxpayerCo.:
gathering information as required by the
tax auditor;
preparing any documentation (information
such as receipts, financial statements, pay
stubs) as required by the tax auditor; and
submitting the documents requested by
theauditor.
An estimate of half an hour is recorded for
submission of documents or payment of the
income tax liability due if the submission
or payment is done electronically and takes
several minutes. An estimate of zero hours is
recorded in the case of a field audit if documents
are submitted in person and at the taxpayers
premises. Table 6 shows an example of a
calculation for Hungary.
(hours)
3
0.5
0.5
8
0
12
Methodology 95
Time to complete a corporate income tax
audit, where applicable
Time is recorded in weeks. Time includes the time
spent by TaxpayerCo. interacting with the auditor
from the moment an audit begins until there are
no further interactions between TaxpayerCo.
and the auditor (including the various rounds
of interactions between TaxpayerCo. and the
auditor). Time also includes the time spent
waiting for the tax auditor to issue the final tax
assessment from the moment TaxpayerCo.
has submitted all relevant information and
documents and there are no further interactions
between TaxpayerCo. and the auditor.
If an economy does not levy corporate income
tax, the economy will not be scored on the two
corporate income tax components.
Time to complete a corporate income tax audit
is recorded as zero if the case study scenario is
unlikely to trigger an audit. Table 7 shows an
example for Hungary.
Ranking calculation and the
distance to frontier measure
This report presents in Appendix 3 the results for
two aggregate benchmark measures: the World
Banks distance to frontier (DTF) measure and
the ease of doing business ranking, which since
Paying Taxes 2015, has been based on the DTF
measure.69 The ease of doing business ranking,
including the ranking for Paying Taxes, compares
economies with one another; while the DTF
score benchmarks economies with respect to
regulatory best practice, showing the absolute
distance to the best performance on each Doing
Business indicator. Both measures can be used for
comparisons over time. When compared across
years, the DTF measure shows how much the
regulatory environment for local entrepreneurs in
each economy has changed over time in absolute
terms, while the ease of paying taxes ranking can
show only how economies have changed relative
to one another.
Table 7
Hungary: Time to complete CIT audit
Interacting with the tax auditor from the start of the audit until there are no further interactions
Waiting for the tax auditor to issue the final tax assessment from the moment of the last interaction between the
taxpayer and the tax authority
Total
We have also included the distance to frontier score and the ease of doing business ranking without post-filing so as to provide an easier comparison
69 
with last years scores and rankings.
96 Paying Taxes 2017. Appendix 1
The ranking of economies on the ease of paying
taxes is determined by sorting their DTF scores on
paying taxes, rounded to 2 decimals. These scores
are the simple average of the distance to frontier
scores for each of the sub-indicators (number of
payments, time, Total Tax Rate, and post-filing
index) with a threshold being applied to the Total
Tax Rate sub-indicator as explained below.
The frontier underlying each DTF score is derived
from the most efficient practice or highest score
achieved on the Paying Taxes sub-indicators
by any economy for all years included in the
analysis up to and including Doing Business 2015.
In Paying Taxes, for example, Hong Kong SAR,
(China) and Saudi Arabia have achieved the
highest performance on the number of payments
(3 payments), United Arab Emirates on time
(12 hours) and Vanuatu on the Total Tax Rate
(8.5%). For the distance to frontier score of the
post-filing index, Barbados, Croatia and several
other economies have the highest score for time
to comply with VAT refund (100), Austria on the
time to obtain a VAT refund (100), and Estonia,
Lithuania, and several other economies on the
time to comply with the corporate income tax
return audit and time to complete the corporate
income tax audit (100).
Calculating the distance to frontier score for
each economy involves rescaling the four sub-
indicators to a common unit as show below. The
four scores are then averaged to give the overall
DTF score.
(weeks)
0.7
8
8.7
The worst performance for each sub-indicator is
defined as the 95th percentile for each component
of the pooled data for all economies for all the
years included in the analysis. All distance to
frontier calculations are based on a maximum of
five decimals. However, the ease of paying taxes
ranking calculation is based on two decimals.
The difference between an economys distance to
frontier score in any previous year and its score on
the Paying Taxes indicator for 2015 illustrates the
extent to which the economy has closed the gap
to the frontier over time. And in any given year
the score measures how far an economy is from
the highest performance. The distance to frontier
measure can also be used for comparisons across
economies in the same year, complementing the
ease of paying taxes ranking.
The DTF score for the number of
payments and time to comply sub-
indicators
The Paying Taxes sub-indicators for the number
of payments and time to comply are rescaled to
a common unit using a linear transformation:
(max y)/(max min), with the minimum value
(min) representing the frontier the highest
performance on that sub-indicator across all
economies for all years included in the analysis up
to and including Doing Business 2015. For the time
to pay taxes, the frontier is defined as the lowest
time recorded among all economies that levy the
three major taxes: profit tax, labour taxes and
mandatory contributions, and value-added tax
(VAT) or sales tax.
The Total Tax Rate threshold and the non-linear
transformation are not based on any economic
theory of an optimal tax rate that minimises
distortions or maximises efficiency in an
economys overall tax system. Instead, they are
largely empirical in nature, with the threshold
set at the lower end of the distribution of tax
rates levied on medium-size enterprises in the
manufacturing sector as observed through the
paying taxes indicators. These calculations
reduce the bias in the Total Tax Rate sub-
indicator toward economies that do not need
to levy significant taxes on companies like the
Doing Business standardised case study company
because they raise public revenue in other
ways for example, through taxes on foreign
companies, through taxes on sectors other than
manufacturing or from natural resources (all of
which are outside the scope of the methodology).
They also take into account the needs of
governments to collect taxes from all firms.

The DTF score for the Total Tax Rate

For the Total Tax Rate, the frontier is defined as
the Total Tax Rate at the 15th percentile of the
overall distribution of Total Tax Rates for all years
included in the analysis up to and including Doing
Business 2015, which is 26.1%. All economies
with a Total Tax Rate below this threshold receive
the same score as the economy at the threshold.
Additionally, above the threshold, the Total
Tax Rate is included in the ranking in a non-
linearfashion.

Methodology 97
Since Paying Taxes 2015, the Total Tax Rate
component of the paying taxes indicator is Distance to frontier (DTF)
transformed in a non-linear fashion before The overall DTF for the time The post-filing index DTF
it enters the distance to frontier score for to comply, the number of takes the form:3
Paying Taxes. As a result of the non-linear payments and each of the four
transformation, an increase in the Total Tax Rate components of the post-filing Post-filing Index DTF = 1/4
has a smaller impact on the distance to frontier index is computed as: [VAT ComplyDTF + VAT Obtain DTF
score for the Total Tax Rate and therefore on + CIT ComplyDTF + CIT
CompleteDTF
the distance to frontier score for Paying Taxes 100 * (max y) / (max min)
for economies with a below-average Total Tax Where y := sub-indicator value
Rate than it would have in the calculation done for a given economy The overall Paying Taxes DTF
in previous years (line B is smaller than line A in will then take the form;
Figure 59). And for economies with an extreme DTF for the Total Tax Rate
(TTR) is computed as: Paying TaxesDTF = 1/4 [TTR DTF +
Total Tax Rate (a rate that is very high relative to
Time DTF + PaymentsDTF +
the average), an increase has a greater impact on
TTR DTF = 100 * [(max y) / Post-filing Index DTF]
both these distance to frontier scores than before
(max min)] 0.8
(line D is bigger than line C in Figure 59).
For a TTR value below the 15th
percentile, TTR DTF is set at 100.

Figure 59
How the non-linear transformation affects the distance to frontier score for the Total Tax Rate

Distance to frontier
100

80
B
A

60

40
D

Distance to frontier
20 for Total Tax Rate
linear

Distance to frontier
for Total Tax Rate
non-linear

0
0 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Total Tax Rate

Note: The non-linear distance to frontier for the Total Tax Rate is equal to the distance to frontier for the Total Tax Rate to the power of 0.8.
Source: Doing Business database.

98 Paying Taxes 2017. Appendix 1

The DTF score for the post-filing index
Each of the four components of the post-filing
index is rescaled to a common unit using a linear
transformation: (max y)/(max min), with the
minimum value (min) representing the frontier
the highest performance on that component.
For each economy the scores obtained for the four
indicators are aggregated through simple averaging
into one distance to frontier score. An economys
distance to frontier score is indicated on a scale
from 0 to 100, where 0 represents the lowest
performance and 100 the frontier. To mitigate the
effects of extreme outliers in the distributions of the
rescaled data, the worst performance (i.e. the max)
is calculated after the removal of outliers which are
defined as being in excess of the 95th percentile.
This year, the max is defined as follows for the four
components of the index:
Time to comply with a VAT refund: 50 hours
Time to obtain a VAT refund: 55 weeks
Time to comply with a CIT audit: 56 hours
Time to complete a CIT audit: 32 weeks
Changes to Paying Taxes
methodology over time
The base for the financial statements
and GNIpc
The case study companys financial statements are
based upon the gross national income per capita
(GNIpc) in each economy. Turnover, for example,
is assumed to be 1,050 times GNIpc giving, after
deducting various expenses, a commercial profit
of 59.4 times GNIpc. For the years 2004 to 2011
the GNIpc value for 2005 has been used.
For the years 2012 to 2015, the 2012 value in each
economy has been used so that the study reflects
more accurately the current economic conditions.
In the future the GNIpc will be updated every
three years.
In some economies, updating the GNIpc to
the 2012 value was not sufficient to bring the
salaries of all the case study employees up to the
minimum wage thresholds that exist in those
economies. In those instances an additional
multiple of two or three times the GNIpc has
beenused.
Expanding the sample of cities covered
for large economies.
Since its inception the World Bank Groups
Doing Business study has focused on the largest
business city of each economy. Depending on the
indicator and the size of the economy, this focus
can be a limitation in extrapolating results to the
economy level. As the subnational Doing Business
reports prepared by the World Bank have shown,
the indicators measuring the procedures, time
and cost to complete a transaction (such as the
dealing with construction permits indicators)
tend to show more variation across cities within
an economy than do indicators capturing
features of the law applicable nationwide (such
as the protecting minority investors or resolving
insolvency indicators). Moreover, this limitation is
likely to be more important in larger economies:
where the largest business city is likely to
represent a smaller share of the overall
economy, and
and in those with greater regional diversity in
business practices.
Methodology 99
To address this issue, from 2015, Doing Business
including the Paying Taxes indicator has
expanded its sample of cities in large economies,
defined as those with a population of more than
100 million in 2013. These include: Bangladesh,
Brazil, China, India, Indonesia, Japan, Mexico,
Nigeria, Pakistan, the Russian Federation and the
United States. For each of these economies the
sample now includes the second largest business
city. Population size was used as the criterion for
selecting these economies for two main reasons:
First, economies with a large population, because
of their size and diversity, are more likely to have
differences in performance on indicators. Second
the larger the population in an economy, the
larger the number of people who can benefit from
improvements in business regulation.
Within each economy the second city was also
selected on the basis of population size and must
be in a different metropolitan area from the
largest business city.70
For an economy represented by two cities, both
sets of data for the sub-indicators are available
and are disclosed in Appendix 3. Both cities
are also included in the economys ranking
calculation.
Calculation of scores and ranking for
economies with two cities covered.
For each of the 11 economies for which a second
city is included, the distance to frontier score is
calculated as the population-weighted average of
the distance to frontier scores for the two cities
covered (Table 8). This is done for the scores for
each of the component sub-indicators: number of
payments, time, Total Tax Rate, and post-filing
index. The table below shows the city data for the
11 economies (see the data table appendix for the
weighted average number of each economy).

Table 8
Economy Population Weight
Bangladesh Dhaka 14,730,537 78%
Chittagong 4,106,060 22%
Brazil Sao Paulo 19,659,808 61%
Rio de Janeiro 12,373,884 39%
China Shanghai 19,979,977 55%
Beijing 16,189,572 45%
India Mumbai 19,421,983 47%
Delhi 21,935,142 53%
Indonesia Jakarta 9,629,953 78%
Surabaya 2,768,199 22%
Japan Tokyo 36,833,979 65%
Osaka 19,491,722 35%
Mexico Mexico City 20,131,688 83%
Monterrey 4,112,643 17%
Nigeria Lagos 10,780,986 77%
Kano 3,220,929 23%
Pakistan Karachi 14,080,737 65%
Lahore 7,487,415 35%
Russian Federation Moscow 11,461,264 70%
Saint Petersburg 4,871,556 30%
United States New York 18,365,262 60%
Los Angeles 12,160,151 40%

Source: United Nations, Department of Economic and Social Affairs, Population Division, World Urbanization Prospects, 2014 Revision, File 12: Population
of Urban Agglomerations with 300,000 Inhabitants or More in 2014, by Country, 1950-2030 (thousands). Available at http://esa.un.orh/unpd/wup/CD-ROM/
Default.aspx

Where the second and third largest cities were very close in population size, the GDP of the city or relevant state was used to determine which city was the
70 

second largest business city.

100 Paying Taxes 2017. Appendix 1

Methodology 101
Appendix 2

Economy sub-indicator
results by region

Which economies are most relevant to you? Use our

comparative modeller, www.pwc.com/payingtaxesmodeller
to create your own comparisons from all the economies
andregions.

102 Paying Taxes 2017. Appendix 2

Figure 60: Africa
Total Tax Rate (%)

Lesotho 10.8 2.8 13.6

Zambia 2.0 10.4 6.2 18.6
Namibia 16.7 1.9 2.1 20.7
Mauritius 10.4 7.7 3.7 21.8
Botswana 21.5 3.6 25.1
South Africa 21.7 4.0 3.1 28.8
South Sudan 6.9 19.2 3.0 29.1
Seychelles 18.8 2.3 9.0 30.1
Sierra Leone 18.8 11.3 0.9 31.0
Libya 22.1 10.3 0.2 32.6
Ghana 18.0 14.7 32.7
Zimbabwe 18.8 5.6 8.4 32.8
Rwanda 25.8 5.6 1.6 33.0
Uganda 22.1 11.3 0.1 33.5
Nigeria 20.3 13.5 0.5 34.3
Malawi 20.4 12.4 1.7 34.5

Swaziland 25.5 5.5 4.1 35.1

Mozambique 30.8 4.5 0.8 36.1

Cabo Verde 18.6 17.6 0.4 36.6

Kenya 30.1 1.9 5.4 37.4

So Tom and Prncipe 19.2 6.8 11.4 37.4

Djibouti 17.7 17.7 2.2 37.6

Madagascar 16.3 20.3 1.5 38.1

Ethiopia 25.4 12.4 0.8 38.6

Burundi 28.9 10.2 1.2 40.3

Burkina Faso 16.2 21.4 3.7 41.3

Egypt, Arab Rep. 14.7 24.4 4.4 43.5

Tanzania 20.8 17.5 5.6 43.9

Senegal 16.2 23.6 5.3 45.1

Gabon 21.1 22.7 1.4 45.2

Sudan 11.5 19.2 14.7 45.4

Guinea-Bissau 15.1 24.8 5.6 45.5

Liberia 35.4 5.4 5.1 45.9

Angola 20.4 9.0 18.6 48.0

Niger 21.2 21.7 5.3 48.2

Mali 10.1 34.3 3.9 48.3

Togo 10.7 23.1 14.7 48.5

Morocco 25.3 22.6 1.4 49.3

Cte d'Ivoire 8.8 23.3 19.2 51.3

Gambia, The 6.1 12.7 32.5 51.3

Congo, Rep. 31.3 23.0 54.3

Congo, Dem. Rep. 27.5 12.6 14.5 54.6

Benin 10.0 26.4 21.0 57.4

Cameroon 38.9 18.3 0.5 57.7

Tunisia 13.1 25.3 21.8 60.2

Chad 31.3 28.4 3.8 63.5

Algeria 8.3 30.6 26.7 65.6

Guinea 26.4 41.9 68.3

Mauritania 23.2 48.1 71.3

Central African Republic 19.8 53.5 73.3

Equatorial Guinea 53.0 25.4 1.0 79.4

Eritrea 9.2 74.5 83.7

Comoros 32.1 184.4 216.5

47.1 Regional average

Profit taxes Labour taxes Other taxes Note: Somalia is not included in the analysis as there is no practice yet.

Results by region 103

Figure 61: Africa
Time to comply (hours)

Djibouti 30 36 16 82
Seychelles 37 36 12 85
Comoros 4 48 48 100
Swaziland 8 60 54 122
Rwanda 20 45 59 124
Liberia 57 53 30 140
Tunisia 64 30 50 144
Botswana 40 40 72 152
Mauritius 36 48 68 152
Malawi 67 78 33 178
Cabo Verde 35 85 60 180
Sudan 70 70 40 180
Madagascar 9 72 102 183
Zambia 52 62 72 186
Tanzania 62 66 67 195
Uganda 39 66 90 195
Kenya 52 63 81 196
Mozambique 50 30 120 200
South Africa 96 52 55 203
Guinea-Bissau 160 24 24 208
South Sudan 54 78 78 210
Morocco 68 41 102 211
Eritrea 24 96 96 216
Togo 24 96 96 216
Ghana 40 88 96 224
Burundi 76 45 111 232

Zimbabwe 78 96 68 242

Algeria 122 76 67 265

Benin 30 120 120 270

Burkina Faso 30 120 120 270

Cte d'Ivoire 30 120 120 270

Mali 30 120 120 270

Niger 30 120 120 270

Angola 80 125 82 287

Namibia 40 52 210 302

Ethiopia 120 114 72 306

Lesotho 70 104 150 324

Gambia, The 40 96 190 326

Sierra Leone 16 157 170 343

Congo, Dem. Rep. 84 154 108 346

Egypt, Arab Rep. 69 165 158 392

So Tom and Prncipe 40 192 192 424

Guinea 32 192 216 440

Senegal 98 88 255 441

Central African Republic 24 240 219 483

Gabon 137 131 220 488

Equatorial Guinea 145 160 187 492

Congo, Rep. 275 146 181 602

Cameroon 174 162 294 630

Mauritania 120 124 480 724

Chad 300 216 250 766

Libya 679 210 889

Nigeria 378 379 151 908

307 Regional average

Corporate income tax Labour taxes Consumption taxes Note: Somalia is not included in the analysis as there is no practice yet.

104 Paying Taxes 2017. Appendix 2

Figure 62: Africa
Number of payments

Morocco 1 1 4 6
South Africa 1 2 4 7
Mauritius 1 1 6 8
Tunisia 1 4 3 8
Libya 4 12 3 19
Madagascar 1 8 14 23
Burundi 5 4 16 25
Gabon 3 4 19 26
Zambia 5 13 8 26
Algeria 12 15 27
Namibia 3 13 11 27
Egypt, Arab Rep. 1 12 16 29
Rwanda 4 8 17 29
Seychelles 13 12 4 29
Cabo Verde 3 13 14 30
Eritrea 2 12 16 30

Ethiopia 2 12 16 30

Angola 2 12 17 31

Kenya 6 14 11 31

Uganda 3 12 16 31

Lesotho 4 12 16 32

Comoros 3 12 18 33

Ghana 7 12 14 33

Liberia 5 12 16 33

Swaziland 2 13 18 33

Botswana 6 13 15 34

Sierra Leone 6 12 16 34

Malawi 5 13 17 35

Mali 4 24 7 35

Djibouti 5 12 19 36

Mozambique 7 12 18 37

South Sudan 5 12 20 37

Niger 3 13 25 41

Sudan 2 12 28 42

Cameroon 13 12 19 44

Burkina Faso 1 24 20 45

Mauritania 1 21 23 45

Equatorial Guinea 1 24 21 46

Guinea-Bissau 5 12 29 46

So Tom and Prncipe 4 12 30 46

Gambia, The 5 13 31 49

Togo 5 24 20 49

Congo, Rep. 5 25 20 50

Zimbabwe 5 16 30 51

Congo, Dem. Rep. 1 36 15 52

Tanzania 5 29 19 53

Chad 12 24 18 54

Central African Republic 4 24 28 56

Benin 5 24 28 57

Guinea 3 36 18 57

Senegal 3 36 19 58

Nigeria 2 38 19 59

Cte d'Ivoire 3 24 36 63

36.7 Regional average

Profit taxes Labour taxes Other taxes Note: Somalia is not included in the analysis as there is no practice yet.

Results by region 105

Figure 63: Africa. Post-filing index (distance to frontier) and components (hours/weeks)

VAT compliance VAT waiting time CIT compliance CIT completion

Easiest Post-filing index (Distance to frontier score) time (hours) (weeks) time (hours) time (weeks)
Morocco 50.0 97.7 Not scored* Not scored* 4.0 0.0
Liberia 96.8 VAT does not exist VAT does not exist 5.0 0.0
Eritrea 96.8 VAT does not exist VAT does not exist 5.0 0.0
Sierra Leone 94.5 Not scored* Not scored* 7.5 0.0
South Sudan 94.0 VAT does not exist VAT does not exist 8.0 0.0
Seychelles 93.2 0.0 16.8 2.0 0.0
Libya 90.8 VAT does not exist VAT does not exist 11.5 0.0
Ethiopia 90.6 8.0 10.2 6.0 0.0
So Tom and Prncipe 90.4 VAT does not exist VAT does not exist 12.0 0.0
Botswana 89.9 10.0 10.5 5.0 0.0
Equatorial Guinea 83.9 Not scored* Not scored* 19.0 0.0
Rwanda 83.3 9.0 26.6 3.5 0.0
Zambia 80.1 10.0 8.3 17.8 6.4
Namibia 79.0 30.0 12.3 5.0 0.0

Lesotho 78.9 11.5 19.2 12.0 3.6

Uganda 78.4 9.0 9.2 20.5 7.0

Swaziland 72.5 16.0 10.9 21.0 8.7

Cabo Verde 70.6 6.0 106.2 t 4.5 0.0

Malawi 63.3 30.5 45.2 4.0 0.0

Mozambique 62.5 28.0 10.5 31.0 8.3

South Africa 58.6 10.0 26.0 14.0 25.1

Mauritius 56.1 7.0 20.3 21.0 29.7

Senegal 54.3 34.0 52.2 12.5 0.0

Djibouti 52.2 4.0 23.0 45.0 20.9

Comoros 51.5 VAT does not exist VAT does not exist 12.0 24.9

Tunisia 49.8 No refund No refund 2.0 0.0

Mali 49.5 No refund No refund 2.5 0.0

Algeria 49.3 No refund No refund 3.0 0.0
Burkina Faso 48.9 No refund No refund 4.0 0.0
Benin 48.9 No refund No refund 4.0 0.0
Gambia, The 48.4 38.5 25.7 29.5 11.0
Guinea-Bissau 48.4 No refund No refund 5.0 0.0
Cameroon 48.4 No refund No refund 5.0 0.0
Tanzania 47.9 No refund No refund 6.0 0.0
Sudan 46.6 No refund No refund 9.0 0.0
Gabon 45.6 14.5 35.9 15.5 33.7t
Cte d'Ivoire 44.3 No refund No refund 14.0 0.0
Ghana 37.9 No refund No refund 12.5 9.0
Burundi 34.0 No refund No refund 15.0 12.6
Kenya 32.1 No refund No refund 21.5 11.1

Niger 30.2 43.5 54.2 42.0 6.3

Madagascar 30.2 No refund No refund 13.5 18.3

Congo, Dem. Rep. 30.0 No refund No refund 24.0 12.4

Egypt, Arab Rep. 29.1 No refund No refund 26.0 12.4

Angola 28.0 VAT does not exist VAT does not exist 44.5 20.9
Togo 27.8 No refund No refund 38.0 7.0
Zimbabwe 23.8 55.5t 23.3 56.5t 21.1
Mauritania 19.0 No refund No refund 19.0 29.4
Nigeria 17.2 No refund No refund 65.0t 10.0

Chad 16.4 No refund No refund 46.0 16.9

Congo, Rep. 14.7 No refund No refund 38.5 23.4

Guinea 12.3 No refund No refund 44.0 23.3

Central African Republic 11.8 No refund No refund 66.0t 16.9

Most difficult Time to comply Time to obtain Time to comply Time to complete
with a VAT refund a VAT refund with a CIT audit a CIT audit
*VAT does not exist for the case study purchase 0.0 indicates that an audit is unlikely and so the economy receives the best score on this component. tWhere an economy's data
sits within the highest 5% of the post-filing component's range, these economies are allocated the worst distance to frontier score of 0 for that component of the post-filing index.
Note: There are some cases, where there is "No practice yet" or "VAT does not exist", these components of the post-filing index are ignored and the remaining components are
106 averaged to create the post-filing distance to frontier score. Somalia is not included in the analysis as there is no practice yet.
Figure 64: Asia Pacific
Total Tax Rate (%)

Vanuatu 4.5 4.0 8.5

Brunei Darussalam 0.8 7.9 8.7
Timor-Leste 11.2 11.2
Samoa 11.2 7.3 18.5
Singapore 1.8 16.2 1.1 19.1
Cambodia 19.5 0.5 1.0 21.0
Hong Kong SAR, China 17.5 5.3 0.1 22.9
Mongolia 10.3 12.4 2.0 24.7
Lao PDR 15.8 6.8 3.6 26.2
Nepal 17.7 11.3 0.5 29.5
Tonga 23.8 5.6 0.7 30.1
Maldives 13.1 7.9 9.2 30.2
Indonesia 16.9 10.3 3.4 30.6
Myanmar 26.2 0.3 4.8 31.3
Solomon Islands 23.3 8.5 0.2 32.0
Thailand 21.6 5.4 5.6 32.6

Kiribati 24.3 8.4 32.7

Korea, Rep. 18.2 13.6 1.3 33.1

Fiji 20.3 12.7 0.1 33.1

Pakistan 18.5 13.8 1.0 33.3

New Zealand 30.0 2.5 1.8 34.3

Bangladesh 30.5 3.9 34.4

Taiwan, China 12.7 18.4 3.4 34.5

Bhutan 33.9 1.4 35.3

Papua New Guinea 23.2 11.7 4.4 39.3

Vietnam 14.4 24.8 0.2 39.4

Malaysia 22.7 16.4 0.9 40.0

Philippines 20.3 8.7 13.9 42.9

Australia 26.0 21.1 0.5 47.6

Afghanistan 48.3 48.3

Japan 26.2 18.4 4.3 48.9

Sri Lanka 1.2 16.9 37.1 55.2

Micronesia, Fed. Sts. 8.5 52.0 60.5

India 20.9 20.0 19.7 60.6

Marshall Islands 11.8 53.0 64.8

China 10.8 48.8 8.4 68.0

Palau 65.8 9.5 0.1 75.4

36.2 Regional average

Profit taxes Labour taxes Other taxes

Results by region 107

Figure 65: Asia Pacific
Time to comply (hours)

Singapore 24 13 30 67
Hong Kong SAR, China 50 24 74
Brunei Darussalam 53 24 77
Solomon Islands 8 30 42 80
Bhutan 53 32 85
Australia 37 18 50 105
Marshall Islands 32 88 120
Vanuatu 24 96 120
Micronesia, Fed. Sts. 32 96 128
Palau 46 96 142
Mongolia 46 48 54 148
New Zealand 34 59 59 152
Malaysia 26 50 88 164
Kiribati 48 72 48 168
Cambodia 23 84 66 173
Japan 62 92 21 175

Sri Lanka 16 21 142 179

Philippines 39 37 110 186

Korea, Rep. 83 80 25 188

Tonga 8 48 144 200

Papua New Guinea 153 8 46 207

Indonesia 75 56 90 221

Taiwan, China 161 27 33 221

Samoa 48 96 80 224

India 45 91 105 241

Fiji 49 101 97 247

China 62 109 88 259

Thailand 160 48 58 266

Afghanistan 77 120 78 275

Timor-Leste 132 144 276

Myanmar 64 111 107 282

Pakistan 40 40 232 312

Nepal 125 84 130 339

Lao PDR 138 42 182 362

Maldives 101 88 217 406

Bangladesh 144 120 171 435

Vietnam 132 189 219 540

212 Regional average

Corporate income tax Labour taxes Consumption taxes

108 Paying Taxes 2017. Appendix 2

Figure 66: Asia Pacific
Number of payments

Hong Kong SAR, China 1 1 1 3

Singapore 1 1 3 5
New Zealand 1 2 4 7
China 3 1 5 9
Malaysia 2 2 5 9
Marshall Islands 4 5 9
Australia 1 4 6 11
Kiribati 5 2 4 11
Palau 4 4 3 11
Taiwan, China 2 3 6 11
Korea, Rep. 2 2 8 12
Japan 3 2 9 14
Brunei Darussalam 1 12 3 16
Bhutan 2 12 4 18
Timor-Leste 5 12 1 18
Mongolia 1 12 6 19

Afghanistan 1 12 7 20

Micronesia, Fed. Sts. 4 17 21

Thailand 2 13 6 21

India 1 16 8 25

Philippines 1 17 10 28

Maldives 3 12 15 30

Tonga 1 12 17 30

Myanmar 5 12 14 31

Vanuatu 12 19 31

Vietnam 6 12 13 31

Papua New Guinea 1 13 18 32

Bangladesh 5 12 16 33

Nepal 4 12 18 34

Solomon Islands 5 12 17 34

Lao PDR 4 12 19 35

Samoa 5 24 8 37

Fiji 5 18 15 38

Cambodia 12 12 16 40

Indonesia 13 14 16 43

Pakistan 5 25 17 47

Sri Lanka 5 13 29 47

23.5 Regional average

Profit taxes Labour taxes Other taxes

Results by region 109

Figure 67: Asia Pacific
Post-filing index (distance to frontier) and components (hours/weeks)

VAT compliance VAT waiting time CIT compliance CIT completion

Easiest Post-filing index (Distance to frontier score) time (hours) (weeks) time (hours) time (weeks)
Solomon Islands 99.1 VAT does not exist VAT does not exist 2.5 0.0
Hong Kong SAR, China 98.6 VAT does not exist VAT does not exist 3.0 0.0
New Zealand 96.9 2.0 5.2 4.0 0.0
Bhutan 95.9 VAT does not exist VAT does not exist 3.0 1.7
Australia 95.4 4.5 7.5 2.3 0.0
Korea, Rep. 92.6 0.0 10.5 10.0 0.0
Samoa 91.4 1.0 12.3 9.5 0.0
Taiwan, China 90.8 4.5 12.3 7.0 0.0
Vanuatu 80.0 4.0 19.7 CIT does not exist CIT does not exist
Japan 78.9 6.0 10.5 24.0 5.4
Mongolia 78.7 20.0 24.2 4.0 0.0
Papua New Guinea 77.1 3.0 44.2 5.0 0.0
Indonesia 76.5 18.0 30.9 4.0 0.0
Singapore 73.4 4.5 18.5 17.0 12.6
Tonga 68.9 41.5 23.7 2.5 0.0
Fiji 68.9 73.0t 10.6 7.0 0.0
Malaysia 64.3 No practice yet No practice yet 5.3 20.6
Philippines 49.8 No refund No refund
N 2.0 0.0
Sri Lanka 48.9 No refund No refund
N 4.0 0.0
China 48.6 No refund No refund
N 4.5 0.0
Thailand 47.3 16.0 27.0 31.5 24.9
Myanmar 46.1 No refund No refund
N 10.0 0.0

Maldives 45.9 No refund No refund

N 10.5 0.0

Bangladesh 43.6 53.0t 20.2 40.0 7.1

Kiribati 41.3 No refund No refund

N 10.0 6.1
Vietnam 38.9 No refund No refund
N 20.3 3.1
Pakistan 37.6 No refund No refund
N 28.5 0.0
Nepal 33.5 No refund No refund
N 29.0 5.0
Lao PDR 29.8 No refund No refund
N 13.5 18.9
Cambodia 28.7 20.0 50.3 31.0 35.1t
Brunei Darussalam 15.6 VAT does not exist VAT does not exist 140.0 t
22.0
India 4.3 No refund No refund
N 54.0 27.7
Timor-Leste 2.3 VAT does not exist VAT does not exist 53.5 51.7t
Afghanistan 0.4 VAT does not exist VAT does not exist 211.5 t
31.7

Most difficult Time to comply Time to obtain Time to comply Time to complete
with a VAT refund a VAT refund with a CIT audit a CIT audit

0.0 indicates that an audit is unlikely and so the economy receives the best score on this component.
t
Where an economy's data sits within the highest 5% of the post-filing component's range, these economies are allocated the worst distance to frontier score of 0 for that
component of the post-filing index.
Note: There are some cases, where there is "No practice yet", "VAT does not exist" or "CIT does not exist", these components of the post-filing index are ignored and the
remaining components are averaged to create the post-filing distance to frontier score. Where there is No refund, these economies are allocated the worst distance to frontier
score of nil for that component of the post-filing index. Micronesia, Fed. Sts., Marshall Islands and Palau have neither a VAT nor a CIT system. They therefore are not scored on the
post-filing index and are omitted from the chart.

110 Paying Taxes 2017. Appendix 2

Figure 68: Central America & the Caribbean
Total Tax Rate (%)

Belize 24.7 5.0 1.4 31.1

Trinidad and Tobago 21.9 8.5 1.8 32.2
Bahamas, The 6.3 27.5 33.8
Jamaica 14.0 13.4 6.9 34.3
Barbados 19.5 12.2 3.0 34.7
St. Lucia 25.8 5.6 3.3 34.7
Dominica 24.4 7.9 2.9 35.2
Guatemala 20.2 14.3 0.7 35.2
Panama 12.4 20.0 4.8 37.2
El Salvador 20.2 17.2 1.4 38.8
St.Vincent & the Grenadines 29.8 6.2 3.3 39.3
Haiti 23.8 12.4 4.1 40.3
Antigua and Barbuda 25.9 10.7 5.3 41.9
Dominican Republic 22.6 18.6 1.2 42.4
Honduras 31.1 3.3 10.0 44.4
Grenada 27.6 5.6 12.1 45.3

St. Kitts and Nevis 30.5 11.2 8.0 49.7

Costa Rica 19.2 32.7 6.4 58.3

Nicaragua 17.6 22.6 20.6 60.8

Puerto Rico (U.S.) 28.6 13.5 20.2 62.3

41.6 Regional average

Profit taxes Labour taxes Other taxes

Figure 69: Central America & the Caribbean

Time to comply (hours)

St.Vincent & the Grenadines 14 49 45 108

St. Lucia 11 51 48 110
Dominica 15 48 54 117
Grenada 32 72 36 140
Belize 27 60 60 147
Costa Rica 18 59 74 151
Haiti 40 72 72 184
Nicaragua 63 76 62 201
St. Kitts and Nevis 27 128 48 203
Antigua and Barbuda 23 136 48 207
Trinidad and Tobago 45 75 90 210
Puerto Rico (U.S.) 80 60 78 218
Honduras 35 93 96 224
Bahamas, The 10 66 157 233
Barbados 27 162 48 237
El Salvador 80 84 84 248

Guatemala 31 126 99 256

Jamaica 42 168 58 268

Dominican Republic 74 80 163 317

Panama 83 144 190 417

210 Regional average

Corporate income tax Labour taxes Consumption taxes

Results by region 111

Figure 70: Central America & the Caribbean
Number of payments

Dominican Republic 1 2 4 7
Guatemala 2 1 5 8
Costa Rica 1 2 7 10
Jamaica 1 1 9 11
Puerto Rico (U.S.) 5 6 5 16
Barbados 3 12 13 28
Belize 12 1 16 29
Bahamas, The 12 19 31
St. Lucia 4 12 19 35
St. Vincent & the Grenadines 4 12 20 36
Dominica 5 12 20 37
St. Kitts and Nevis 5 12 22 39
Trinidad and Tobago 4 24 11 39
El Salvador 13 12 16 41
Grenada 13 12 17 42
Nicaragua 1 24 17 42

Haiti 6 25 16 47

Honduras 5 13 30 48

Panama 5 16 31 52

Antigua and Barbuda 13 24 20 57

32.8 Regional average

Profit taxes Labour taxes Other taxes

Figure 71: Central America & the Caribbean

Post-filing index (distance to frontier) and components (hours/weeks)

VAT compliance VAT waiting time CIT compliance CIT completion

Easiest Post-filing index (Distance to frontier score) time (hours) (weeks) time (hours) time (weeks)
Belize 97.6 2.5 4.2 3.0 0.0
Costa Rica 91.1 5.5 14.5 3.0 0.0
St. Lucia 87.2 8.3 19.7 3.0 0.0
Barbados 73.6 0.0 56.3 t
4.5 0.0
St. Vincent & the Grenadines 65.1 10.5 36.2 23.0 5.0
Dominica 49.5 No refund No refund
N 2.5 0.0
St. Kitts and Nevis 49.5 No refund No refund
N 2.5 0.0
Antigua and Barbuda 49.1 No refund No refund
N 3.5 0.0
Grenada 48.4 No refund No refund
N 5.0 0.0
Honduras 48.1 20.0 54.2 13.0 15.4
Panama 46.6 No refund No refund
N 9.0 0.0
Puerto Rico (U.S.) 41.4 VAT does not exist VAT does not exist 42.0 13.7
Guatemala 39.3 No refund No refund
N 16.0 5.2
Haiti 26.8 No refund No refund
N 37.5 8.6
Trinidad and Tobago 22.7 70.0 t
29.3 55.0 19.4
Jamaica 19.4 40.0 63.3t 24.5 61.1t
Dominican Republic 14.1 No refund No refund
N 61.5t 14.0
Nicaragua 13.6 No refund No refund
N 90.0t 14.6
El Salvador 10.1 No refund No refund
N 34.0 47.7t

Time to comply Time to obtain Time to comply Time to complete

Most difficult
with a VAT refund a VAT refund with a CIT audit a CIT audit

0.0 indicates that an audit is unlikely and so the economy receives the best score on this component.
t
Where an economy's data sits within the highest 5% of the post-filing component's range, these economies are allocated the worst distance to frontier score of 0 for that
component of the post-filing index.
Note: There are some cases, where there is "No practice yet", "VAT does not exist" or "CIT does not exist", these components of the post-filing index are ignored and the
remaining components are averaged to create the post-filing distance to frontier score. Where there is No refund, these economies are allocated the worst distance to frontier
score of nil for that component of the post-filing index. Bahamas, The has neither a VAT nor a CIT system. It is therefore not scored on the post-filing index and is omitted from the
chart.

112 Paying Taxes 2017. Appendix 2

Figure 72: Central Asia & Eastern Europe
Total Tax Rate (%)

Macedonia, FYR 11.0 2.0 13.0

Kosovo 9.3 5.6 0.3 15.2
Georgia 14.3 2.1 16.4
Armenia 17.6 0.9 18.5
Montenegro 8.2 13.3 0.7 22.2
Bosnia and Herzegovina 7.2 13.5 1.9 22.6
Israel 20.8 5.8 1.5 28.1
Kyrgyz Republic 6.4 19.5 3.1 29.0
Kazakhstan 16.2 11.2 1.8 29.2
Albania 14.1 18.8 3.6 36.5
Uzbekistan 11.5 24.9 1.7 38.1
Serbia 16.0 20.2 3.5 39.7
Azerbaijan 13.0 24.8 2.0 39.8
Moldova 8.9 31.1 0.4 40.4
Turkey 18.2 19.9 3.0 41.1
Russian Federation 8.8 36.1 2.5 47.4

Ukraine 8.7 43.1 0.1 51.9

Belarus 12.9 39.0 2.9 54.8

Tajikistan 17.7 28.5 19.0 65.2

34.2 Regional average

Profit taxes Labour taxes Other taxes

Figure 73: Central Asia & Eastern Europe

Time to comply (hours)

Macedonia, FYR 19 56 44 119

Kosovo 29 39 87 155
Russian Federation 53 76 39 168
Belarus 78 59 39 176
Kazakhstan 55 70 53 178
Moldova 42 84 55 181
Uzbekistan 66 57 70 193
Azerbaijan 60 78 57 195
Turkey 46 80 91 217
Kyrgyz Republic 59 71 95 225
Serbia 38 103 85 226
Israel 110 60 65 235
Tajikistan 74 48 136 258
Albania 105 66 90 261
Georgia 120 56 94 270
Montenegro 43 93 164 300

Armenia 113 103 97 313

Ukraine 57 100 199 356

Bosnia and Herzegovina 68 81 262 411

233 Regional average

Corporate income tax Labour taxes Consumption taxes

Results by region 113

Figure 74: Central Asia & Eastern Europe
Number of payments

Georgia 1 1 3 5
Ukraine 1 1 3 5
Azerbaijan 1 1 4 6
Belarus 1 2 4 7
Kazakhstan 1 1 5 7
Macedonia, FYR 1 1 5 7
Russian Federation 1 2 4 7
Kosovo 5 1 4 10
Moldova 1 3 6 10
Turkey 1 1 9 11
Tajikistan 1 1 10 12
Armenia 1 1 12 14
Montenegro 1 13 4 18
Israel 2 12 19 33
Serbia 1 1 31 33
Albania 5 12 17 34

Bosnia and Herzegovina 12 1 21 34

Uzbekistan 8 24 14 46

Kyrgyz Republic 4 12 35 51

18.4 Regional average

Profit taxes Labour taxes Other taxes

Figure 75: Central Asia & Eastern Europe

Post-filing index (distance to frontier) and components (hours/weeks)

VAT compliance VAT waiting time CIT compliance CIT completion

Easiest Post-filing index (Distance to frontier score) time (hours) (weeks) time (hours) time (weeks)
Serbia 94.0 4.0 8.2 5.0 0.0

Moldova 91.4 8.3 11.6 2.5 0.0

Russian Federation 87.6 7.2 20.5 2.5 0.0
Georgia 87.2 20.5 8.5 1.5 0.0
Montenegro 85.5 4.0 14.2 8.0 5.4
Macedonia, FYR 84.2 10.0 25.2 2.0 0.0
Albania 83.0 9.0 27.7 3.0 0.0
Azerbaijan 81.0 7.5 21.2 10.0 3.4
Ukraine 79.3 16.0 28.2 3.0 0.0
Israel 65.5 34.0 31.3 10.0 0.0
Kosovo 61.0 30.0 16.8 22.0 10.3
Belarus 50.0 No refund No refund 1.5 0.0
Kazakhstan 49.1 No refund No refund 3.5 0.0
Armenia 49.1 No refund No refund 3.5 0.0
Bosnia and Herzegovina 47.9 40.0 18.0 30.5 14.9
Uzbekistan 47.0 No refund No refund 8.0 0.0
Tajikistan 41.7 No refund No refund 10.0 5.6
Kyrgyz Republic 36.9 No refund No refund 21.0 5.3
Turkey 3.9 No refund No refund 47.5 32.1t

Most difficult Time to comply Time to obtain Time to comply Time to complete
with a VAT refund a VAT refund with a CIT audit a CIT audit

0.0 indicates that an audit is unlikely and so the economy receives the best score on this component.
t
Where an economy's data sits within the highest 5% of the post-filing component's range, these economies are allocated the worst distance to frontier score of 0 for that
component of the post-filing index.
Note: There are some cases, where there is "No practice yet", "VAT does not exist" or "CIT does not exist", these components of the post-filing index are ignored and the
remaining components are averaged to create the post-filing distance to frontier score. Where there is No refund, these economies are allocated the worst distance to frontier
score of nil for that component of the post-filing index.

114 Paying Taxes 2017. Appendix 2

Figure 76: EU & EFTA
Total Tax Rate (%)

Luxembourg 4.6 15.7 0.5 20.8

Croatia 19.4 1.5 20.9
Cyprus 9.5 13.4 1.8 24.7
Denmark 19.0 3.2 2.8 25.0
Ireland 12.4 12.2 1.4 26.0
Bulgaria 5.0 20.2 1.8 27.0
Switzerland 9.3 17.7 1.8 28.8
Iceland 8.9 18.3 2.9 30.1
United Kingdom 18.3 10.9 1.7 30.9
Slovenia 12.7 18.2 0.1 31.0
San Marino 5.1 30.0 0.3 35.4
Latvia 6.3 26.6 3.0 35.9
Finland 11.7 25.1 1.3 38.1
Romania 11.6 25.8 1.0 38.4
Norway 23.6 15.9 39.5
Portugal 12.5 26.8 0.5 39.8

Netherlands 20.6 19.4 0.4 40.4

Poland 14.5 24.9 1.0 40.4

Lithuania 5.9 35.2 1.6 42.7

Malta 32.4 10.9 0.5 43.8

Hungary 9.9 34.3 2.3 46.5

Estonia 7.9 38.8 2.0 48.7

Germany 23.2 21.3 4.4 48.9

Spain 12.4 35.9 0.7 49.0

Sweden 13.1 35.4 0.6 49.1

Czech Republic 9.1 38.4 2.5 50.0

Greece 22.4 27.7 0.6 50.7

Austria 16.9 34.2 0.5 51.6

Slovak Republic 10.5 39.7 1.4 51.6

Belgium 9.1 48.9 0.7 58.7

Italy 17.0 43.4 1.6 62.0

France 0.4 53.5 8.9 62.8

40.3 Regional average

Profit taxes Labour taxes Other taxes

Results by region 115

Figure 77: EU & EFTA
Time to comply (hours)

San Marino 4 48 52
Luxembourg 19 14 22 55
Switzerland 15 40 8 63
Ireland 12 40 30 82
Norway 24 15 44 83
Estonia 20 31 33 84
Finland 21 48 24 93
United Kingdom 37 48 25 110
Netherlands 21 64 34 119
Sweden 50 36 36 122
Cyprus 23 65 39 127
Denmark 25 65 40 130
Austria 46 50 35 131
France 28 80 31 139
Malta 23 92 24 139
Iceland 40 60 40 140

Spain 33 84 35 152

Belgium 21 40 100 161

Romania 25 82 54 161

Latvia 23 80 66 169

Lithuania 28 85 58 171

Slovak Republic 46 62 84 192

Greece 78 46 69 193

Croatia 58 96 52 206

Germany 41 134 43 218

Czech Republic 53 87 94 234

Italy 39 169 32 240

Portugal 63 90 90 243

Slovenia 86 90 69 245

Poland 70 103 98 271

Hungary 35 146 96 277

Bulgaria 32 256 165 453

164 Regional average

Corporate income tax Labour taxes Consumption taxes

116 Paying Taxes 2017. Appendix 2

Figure 78: EU & EFTA
Number of payments

Norway 1 1 2 4
Sweden 1 1 4 6
Latvia 1 1 5 7
Poland 1 2 4 7
Czech Republic 1 2 5 8
Estonia 1 7 8
Finland 1 3 4 8
France 1 2 5 8
Greece 1 1 6 8
Malta 2 1 5 8
Portugal 1 1 6 8
Slovak Republic 1 1 6 8
Spain 1 1 6 8
United Kingdom 1 1 6 8
Germany 2 1 6 9

Ireland 1 1 7 9

Netherlands 1 1 7 9

Denmark 3 1 6 10

Slovenia 1 1 8 10

Belgium 1 2 8 11

Hungary 2 2 7 11

Lithuania 1 2 8 11

Austria 1 3 8 12

Bulgaria 1 1 12 14

Italy 2 1 11 14

Romania 1 1 12 14

San Marino 2 12 4 18

Switzerland 2 7 10 19

Iceland 1 13 7 21

Luxembourg 5 12 6 23

Cyprus 2 12 14 28

Croatia 1 1 29 31

11.8 Regional average

Profit taxes Labour taxes Other taxes

Results by region 117

Figure 79: EU & EFTA
Post-filing Index (distance to frontier) and components (hours/weeks)

VAT compliance VAT waiting time CIT compliance CIT completion

Easiest Post-filing index (Distance to frontier score) time (hours) (weeks) time (hours) time (weeks)
San Marino 98.6 VAT does not exist VAT does not exist 3.0 0.0

Estonia 98.5 2.3 3.9 1.5 0.0

Austria 98.4 1.5 3.2 3.3 0.0
Latvia 98.1 0.0 6.2 2.5 0.0
Croatia 97.9 0.0 6.2 3.0 0.0
Lithuania 97.6 2.0 6.2 1.5 0.0
Germany 97.4 0.0 5.2 5.0 0.0
Slovenia 95.0 3.0 5.2 7.0 0.0
Czech Republic 94.3 4.0 9.5 3.0 0.0
Netherlands 93.4 0.0 14.5 4.0 0.0
Finland 93.1 5.0 6.2 8.0 0.0
Ireland 92.7 1.0 16.3 2.5 0.0
Portugal 92.7 4.0 14.2 1.5 0.0
Denmark 92.6 8.0 7.1 4.8 0.0
Spain 92.5 0.0 18.2 2.0 0.0
France 92.4 10.0 6.2 4.0 0.0

Poland 92.2 8.0 10.2 2.5 0.0

Cyprus 91.5 6.0 12.2 4.0 0.0

Sweden 90.7 10.5 8.2 5.0 0.0

Luxembourg 89.9 10.5 10.3 4.5 0.0

Slovak Republic 89.9 5.0 18.5 2.0 0.0

Iceland 89.2 3.0 20.9 3.3 0.0

Belgium 88.3 5.0 18.5 5.5 0.0

United Kingdom 87.4 1.5 9.5 6.5 8.3

Switzerland 86.6 1.5 14.5 9.5 4.6

Malta 86.0 0.0 28.5 5.5 0.0

Romania 79.6 22.0 22.2 2.0 0.0

Greece 79.3 16.5 27.2 3.5 0.0

Hungary 75.8 15.0 13.7 12.0 8.7

Bulgaria 73.3 15.0 19.1 12.5 8.3

Norway 68.0 9.0 10.5 11.5 24.9

Italy 48.4 51.0t 86.0t 5.0 0.0

Most difficult Time to comply Time to obtain Time to comply Time to complete
with a VAT refund a VAT refund with a CIT audit a CIT audit
*VAT does not exist for the case study purchase

0.0 indicates that an audit is unlikely and so the economy receives the best score on this component.
t
Where an economy's data sits within the highest 5% of the post-filing component's range, these economies are allocated the worst distance to frontier score of 0 for that
component of the post-filing index.
Note: There are some cases, where there is "No practice yet", "VAT does not exist" or "CIT does not exist", these components of the post-filing index are ignored and the
remaining components are averaged to create the post-filing distance to frontier score. Where there is No refund, these economies are allocated the worst distance to frontier
score of nil for that component of the post-filing index.

118 Paying Taxes 2017. Appendix 2

Figure 80: Middle East
Total Tax Rate (%)

Qatar 11.3 11.3

Kuwait 13.0 13.0
Bahrain 13.5 13.5
West Bank and Gaza 15.0 0.3 15.3
Saudi Arabia 2.2 13.5 15.7
United Arab Emirates 14.1 1.8 15.9
Oman 10.8 13.0 0.1 23.9
Jordan 10.6 14.9 2.1 27.6
Iraq 14.3 13.5 27.8
Lebanon 6.1 23.8 0.4 30.3
Yemen, Rep. 20.0 11.3 1.8 33.1
Syrian Arab Republic 23.0 19.3 0.4 42.7
Iran, Islamic Rep. 17.8 25.9 0.4 44.1

24.2 Regional average

Profit taxes Labour taxes Other taxes

Figure 81: Middle East

Time to comply (hours)

United Arab Emirates 12 12

Bahrain 27 27
Qatar 5 36 41
Saudi Arabia 33 34 67
Oman 56 12 68
Kuwait 98 98
Jordan 10 90 45 145
West Bank and Gaza 18 96 48 162
Lebanon 40 100 41 181
Yemen, Rep. 56 72 120 248
Iraq 24 288 312
Syrian Arab Republic 300 36 336
Iran, Islamic Rep. 32 240 72 344

157 Regional average

Corporate income tax Labour taxes Consumption taxes

Results by region 119

Figure 82: Middle East
Number of payments

Saudi Arabia 1 1 1 3
Qatar 1 1 2 4
United Arab Emirates 1 3 4
Kuwait 12 12
Bahrain 12 1 13
Iraq 1 12 1 14
Oman 2 12 1 15
Iran, Islamic Rep. 1 12 7 20
Lebanon 1 12 7 20
Syrian Arab Republic 2 12 6 20
Jordan 1 12 12 25
West Bank and Gaza 3 12 13 28
Yemen, Rep. 1 24 19 44

17.1 Regional average

Profit taxes Labour taxes Other taxes

Figure 83: Middle East

Post-filing index (distance to frontier) and components (hours/weeks)

VAT compliance VAT waiting time CIT compliance CIT completion

Easiest Post-filing index (Distance to frontier score) time (hours) (weeks) time (hours) time (weeks)
Yemen, Rep. 95.4 4.0 6.2 4.0 0.0
Syrian Arab Republic 90.4 VAT does not exist VAT does not exist 12.0 0.0
Oman 85.3 VAT does not exist VAT does not exist 17.5 0.0
Iraq 84.9 VAT does not exist VAT does not exist 18.0 0.0
Iran, Islamic Rep. 78.8 9.0 33.5 6.0 0.0
Lebanon 63.3 45.0 27.4 7.0 0.0
Jordan 49.3 No refund No refund 3.0 0.0
West Bank and Gaza 38.0 18.5 54.2 14.0 28.7
Saudi Arabia 10.9 VAT does not exist VAT does not exist 71.3t 25.0

Most difficult Time to comply Time to obtain Time to comply Time to complete
with a VAT refund a VAT refund with a CIT audit a CIT audit
*VAT does not exist for the case study purchase

0.0 indicates that an audit is unlikely and so the economy receives the best score on this component.
t
Where an economy's data sits within the highest 5% of the post-filing component's range, these economies are allocated the worst distance to frontier score of 0 for that
component of the post-filing index.
Note: There are some cases, where there is "No practice yet", "VAT does not exist" or "CIT does not exist", these components of the post-filing index are ignored and the
remaining components are averaged to create the post-filing distance to frontier score. Where there is No refund, these economies are allocated the worst distance to frontier
score of nil for that component of the post-filing index. Bahrain, Kuwait, Qatar and United Arab Emirates have neither a VAT nor a CIT system. They therefore are not scored on the
post-filing index and are omitted from the chart.

120 Paying Taxes 2017. Appendix 2

Figure 84: North America
Total Tax Rate (%)

Canada 3.9 12.8 4.3 21.0

United States 28.1 9.8 6.1 44.0
Mexico 25.6 25.5 0.9 52.0

39.0 Regional average

Profit taxes Labour taxes Other taxes

Figure 85: North America

Time to comply (hours)

Canada 45 36 50 131
United States 87 55 33 175
Mexico 122 64 100 286

197 Regional average

Corporate income tax Labour taxes Consumption taxes

Figure 86: North America

Number of payments

Mexico 1 2 3 6
Canada 1 3 4 8
United States 2 4 5 11

8.2 Regional average

Profit taxes Labour taxes Other taxes

Figure 87: North America

Post-filing index (distance to frontier) and components (hours/weeks)

VAT compliance VAT waiting time CIT compliance CIT completion

Easiest Post-filing index (Distance to frontier score) time (hours) (weeks) time (hours) time (weeks)
United States 93.1 VAT does not exist VAT does not exist 9.0 0.0

Canada 76.4 7.5 9.9 16.0 12.7

Mexico 42.6 20.0 37.2 14.5 35.0t

Most difficult Time to comply Time to obtain Time to comply Time to complete
with a VAT refund a VAT refund with a CIT audit a CIT audit
*VAT does not exist for the case study purchase

0.0 indicates that an audit is unlikely and so the economy receives the best score on this component.
t
Where an economy's data sits within the highest 5% of the post-filing component's range, these economies are allocated the worst distance to frontier score of 0 for that
component of the post-filing index.
Note: There are some cases, where there is "No practice yet", "VAT does not exist" or "CIT does not exist", these components of the post-filing index are ignored and the
remaining components are averaged to create the post-filing distance to frontier score. Where there is No refund, these economies are allocated the worst distance to frontier
score of nil for that component of the post-filing index.

Results by region 121

Figure 88: South America
Total Tax Rate (%)

Suriname 27.9 27.9

Chile 23.9 4.0 2.6 30.5
Guyana 21.3 9.2 1.8 32.3
Ecuador 16.3 13.7 2.5 32.5
Paraguay 9.6 18.6 6.8 35.0
Peru 21.4 11.0 3.2 35.6
Uruguay 23.6 15.6 2.6 41.8
Venezuela, RB 9.5 18.0 37.2 64.7
Brazil 24.9 40.2 3.3 68.4
Colombia 22.2 18.6 29.0 69.8
Bolivia 18.8 64.9 83.7
Argentina 3.9 29.3 72.8 106.0

52.3 Regional average

Profit taxes Labour taxes Other taxes

Figure 89: South America

Time to comply (hours)

Suriname 48 24 127 199

Colombia 86 87 66 239
Guyana 41 48 167 256
Peru 39 111 110 260
Uruguay 77 96 98 271
Chile 42 125 124 291
Argentina 91 84 184 359
Paraguay 138 96 144 378
Ecuador 118 306 240 664
Venezuela, RB 120 288 384 792
Bolivia 110 507 408 1025
Brazil 486 363 1189 2038

564 Regional average

Corporate income tax Labour taxes Consumption taxes

122 Paying Taxes 2017. Appendix 2

Figure 90: South America
Number of payments

Chile 1 1 5 7
Ecuador 2 1 5 8
Argentina 1 1 7 9
Peru 1 2 6 9
Brazil 2 2 6 10
Colombia 2 1 9 12
Paraguay 1 12 7 20
Uruguay 1 13 6 20
Suriname 5 12 13 30
Guyana 6 12 17 35
Bolivia 1 12 29 42
Venezuela, RB 14 28 28 70

22.6 Regional average

Profit taxes Labour taxes Other taxes

Figure 91: South America

Post-filing index (distance to frontier) and components (hours/weeks)

VAT compliance VAT waiting time CIT compliance CIT completion

Easiest Post-filing index (Distance to frontier score) time (hours) (weeks) time (hours) time (weeks)
Ecuador 49.3 No refund No refund
N 3.0 0.0
Uruguay 49.3 No refund No refund
N 3.0 0.0
Bolivia 49.1 No refund No refund
N 3.5 0.0
Suriname 48.4 No refund No refund
N 5.0 0.0
Venezuela, RB 48.4 No refund No refund
N 5.0 0.0
Colombia 47.5 No refund No refund
N 7.0 0.0
Peru 32.2 No refund No refund
N 17.5 13.4
Guyana 31.0 No refund No refund
N 30.5 7.3
Argentina 17.0 No refund No refund
N 19.0 37.7t
Paraguay 10.2 No refund No refund
N 51.0 21.9
Brazil 8.0 No refund No refund
N 38.5 35.1t
Chile 5.6 No refund No refund
N 65.0 t
24.9

Most difficult Time to comply Time to obtain Time to comply Time to complete
with a VAT refund a VAT refund with a CIT audit a CIT audit
*VAT does not exist for the case study purchase

0.0 indicates that an audit is unlikely and so the economy receives the best score on this component.
t
Where an economy's data sits within the highest 5% of the post-filing component's range, these economies are allocated the worst distance to frontier score of 0 for that
component of the post-filing index.
Note: There are some cases, where there is "No practice yet", "VAT does not exist" or "CIT does not exist", these components of the post-filing index are ignored and the
remaining components are averaged to create the post-filing distance to frontier score. Where there is No refund, these economies are allocated the worst distance to frontier
score of nil for that component of the post-filing index.

Results by region 123

Appendix 3

The data tables

Table 9: Overall Paying Taxes ranking

Table 10: Total Tax Rate
Table 11: Time to comply
Table 12: Tax payments
Table 13: Post-filing index

124 Paying Taxes 2017. Appendix 3

Table 9: Overall Paying Taxes ranking Without post-filing (for comparison purposes only) Overall ranking (including post-filing index)
Economy Distance to frontier Rank Distance to frontier Rank
Afghanistan 68.24 121 51.29 163
Albania 66.96 125 70.96 97
Algeria 55.55 161 53.99 155
Angola 61.66 148 53.23 157
Antigua and Barbuda 54.35 166 53.03 160
Argentina 47.36 173 39.76 178
Armenia 80.29 57 72.49 88
Australia 82.35 42 85.60 25
Austria 78.37 68 83.39 42
Azerbaijan 84.36 33 83.52 40
Bahamas, The 71.39 108 71.39 95
Bahrain 94.44 7 94.44 4
Bangladesh 59.56 154 55.56 151
Barbados 72.39 100 72.70 85
Belarus 77.20 73 70.40 99
Belgium 73.65 90 77.31 66
Belize 78.17 69 83.03 44
Benin 43.20 176 44.61 173
Bhutan 85.50 30 88.11 19
Bolivia 12.18 189 21.41 186
Bosnia and Herzegovina 64.13 139 60.08 133
Botswana 77.47 71 80.58 55
Brazil 41.36 178 33.03 181
Brunei Darussalam 91.36 16 72.43 89
Bulgaria 72.64 99 72.81 83
Burkina Faso 58.08 157 55.77 150
Burundi 71.61 105 62.20 123
Cabo Verde 73.32 95 72.64 86
Cambodia 73.06 97 61.97 124
Cameroon 31.70 181 35.87 180
Canada 93.00 9 88.86 17
Central African Republic 23.47 185 20.56 187
Chad 19.54 187 18.76 189
Chile 83.27 39 63.85 120
China 64.40 138 60.46 131
Colombia 62.72 143 58.91 139
Comoros 47.37 172 48.41 168
Congo, Dem. Rep. 43.50 174 40.12 177
Congo, Rep. 31.62 182 27.39 183
Costa Rica 74.93 86 78.98 62
Cte d'Ivoire 43.05 177 43.35 175
Croatia 76.36 77 81.74 49
Cyprus 82.09 46 84.45 34
Czech Republic 76.15 80 80.69 53
Denmark 91.94 12 92.11 7
Djibouti 74.56 87 68.96 106
Dominica 73.32 95 67.38 111
Dominican Republic 76.25 79 60.70 129
Ecuador 62.56 145 59.25 137
Egypt, Arab Rep. 59.60 153 51.96 162
El Salvador 62.65 144 49.51 166
Equatorial Guinea 24.35 184 39.25 179
Eritrea 43.49 175 56.82 147
Estonia 84.53 32 88.04 21
Ethiopia 65.88 132 72.06 90
Fiji 67.09 124 67.55 110
Finland 89.28 19 90.23 13
France 74.15 88 78.72 63
Gabon 55.48 162 53.00 161
Gambia, The 47.96 171 48.08 171
Georgia 87.50 24 87.43 22
Germany 76.99 74 82.10 48
Ghana 71.24 109 62.91 122
The data tables 125
Table 9: Overall Paying Taxes ranking Without post-filing (for comparison purposes only) Overall ranking (including post-filing index)
Economy Distance to frontier Rank Distance to frontier Rank
Greece 77.88 70 78.22 64
Grenada 64.46 137 60.44 132
Guatemala 82.31 43 71.55 93
Guinea 28.27 183 24.28 184
Guinea-Bissau 58.65 156 56.08 149
Guyana 68.69 119 59.27 136
Haiti 61.87 147 53.10 159
Honduras 57.27 158 54.97 152
Hong Kong SAR, China 98.71 4 98.69 3
Hungary 74.02 89 74.46 77
Iceland 83.46 37 84.88 29
India 60.68 149 46.58 172
Indonesia 66.83 126 69.25 104
Iran, Islamic Rep. 66.78 127 69.79 100
Iraq 79.53 63 80.86 52
Ireland 94.97 6 94.40 5
Israel 72.82 98 71.00 96
Italy 66.06 129 61.65 126
Jamaica 80.43 56 65.18 116
Japan 76.40 76 77.03 70
Jordan 82.14 45 73.94 79
Kazakhstan 89.69 18 79.54 60
Kenya 71.59 106 61.72 125
Kiribati 86.34 27 75.08 73
Korea, Rep. 84.55 31 86.56 23
Kosovo 90.65 17 83.24 43
Kuwait 92.48 10 92.48 6
Kyrgyz Republic 62.94 142 56.43 148
Lao PDR 66.06 129 56.98 146
Latvia 87.02 26 89.79 15
Lebanon 81.79 48 77.17 67
Lesotho 69.72 113 72.03 91
Liberia 69.17 116 76.07 72
Libya 54.77 164 63.78 121
Lithuania 81.40 50 85.44 27
Luxembourg 88.58 22 88.92 16
Macedonia, FYR 94.17 8 91.67 9
Madagascar 76.32 78 64.80 117
Malawi 71.66 104 69.58 102
Malaysia 84.16 34 79.20 61
Maldives 64.74 134 60.02 134
Mali 60.16 152 57.50 144
Malta 84.13 35 84.59 33
Marshall Islands 73.45 94 73.45 82
Mauritania 19.93 186 19.69 188
Mauritius 91.92 13 82.96 45
Mexico 73.53 92 65.81 114
Micronesia, Fed. Sts. 68.78 118 68.78 108
Moldova 82.56 41 84.76 31
Mongolia 86.01 29 84.19 35
Montenegro 78.74 65 80.42 57
Morocco 78.78 64 83.51 41
Mozambique 68.65 120 67.11 112
Myanmar 70.03 112 64.05 119
Namibia 73.63 91 74.97 74
Nepal 66.24 128 58.05 142
Netherlands 86.30 28 88.07 20
New Zealand 88.64 21 90.71 11
Nicaragua 53.18 167 43.29 176
Niger 56.87 159 50.19 165
Nigeria 31.72 180 28.09 182
Norway 91.38 15 85.53 26
Oman 92.35 11 90.60 12
126 Paying Taxes 2017. Appendix 3
Table 9: Overall Paying Taxes ranking Without post-filing (for comparison purposes only) Overall ranking (including post-filing index)
Economy Distance to frontier Rank Distance to frontier Rank
Pakistan 58.66 155 53.40 156
Palau 64.65 135 64.65 118
Panama 48.60 170 48.09 170
Papua New Guinea 69.50 114 71.40 94
Paraguay 69.45 115 54.64 153
Peru 81.34 51 69.04 105
Philippines 71.06 110 65.74 115
Poland 79.58 62 82.73 47
Portugal 80.76 54 83.75 38
Puerto Rico (U.S.) 65.95 131 59.82 135
Qatar 99.44 1 99.44 1
Romania 82.31 43 81.64 50
Russian Federation 81.41 49 82.96 45
Rwanda 78.48 66 79.69 59
Samoa 72.10 102 76.93 71
San Marino 87.16 25 90.02 14
So Tom and Prncipe 51.50 169 61.22 127
Saudi Arabia 99.07 3 77.04 69
Senegal 40.17 179 43.70 174
Serbia 67.81 123 74.36 78
Seychelles 81.82 47 84.66 32
Sierra Leone 65.34 133 72.63 87
Singapore 97.99 5 91.85 8
Slovak Republic 77.46 72 80.57 56
Slovenia 83.73 36 86.55 24
Solomon Islands 78.42 67 83.58 39
South Africa 88.58 22 81.09 51
South Sudan 71.44 107 77.09 68
Spain 80.88 52 83.80 37
Sri Lanka 54.59 165 53.16 158
St. Kitts and Nevis 60.64 150 57.86 143
St. Lucia 75.04 85 78.09 65
St. Vincent and the Grenadines 72.39 100 70.56 98
Sudan 62.34 146 58.39 141
Suriname 76.45 75 69.44 103
Swaziland 75.36 83 74.65 76
Sweden 83.46 37 85.28 28
Switzerland 89.13 20 88.49 18
Syrian Arab Republic 67.89 122 73.51 81
Taiwan, China 82.77 40 84.78 30
Tajikistan 64.47 136 58.79 140
Tanzania 56.20 160 54.13 154
Thailand 75.80 81 68.68 109
Timor-Leste 79.97 60 60.55 130
Togo 55.03 163 48.22 169
Tonga 75.37 82 73.76 80
Trinidad and Tobago 68.89 117 57.33 145
Tunisia 75.36 83 68.96 106
Turkey 79.81 61 60.83 128
Uganda 73.47 93 74.71 75
Ukraine 70.54 111 72.72 84
United Arab Emirates 99.44 1 99.44 1
United Kingdom 91.83 14 90.74 10
United States 80.76 54 83.85 36
Uruguay 71.67 103 66.08 113
Uzbekistan 63.08 141 59.06 138
Vanuatu 80.79 53 80.60 54
Venezuela, RB 13.85 188 22.49 185
Vietnam 52.87 168 49.39 167
West Bank and Gaza 80.29 57 69.71 101
Yemen, Rep. 63.72 140 71.64 92
Zambia 80.19 59 80.16 58
Zimbabwe 60.28 151 51.15 164

Note: There is no data for Somalia as there is currently no practice yet The data tables 127
Table 10: Total Tax Rate Total Tax Rate, % of commercial profit
Profit tax Labour tax Other taxes
Economy Total Tax Rate Total Tax Rate Total Tax Rate Total Tax Rate
Afghanistan 48.3 0.0 0.0 48.3
Albania 36.5 14.1 18.8 3.6
Algeria 65.6 8.3 30.6 26.7
Angola 48.0 20.4 9.0 18.6
Antigua and Barbuda 41.9 25.9 10.7 5.3
Argentina 106.0 3.9 29.3 72.8
Armenia 18.5 17.6 0.0 0.9
Australia 47.6 26.0 21.1 0.5
Austria 51.6 16.9 34.2 0.5
Azerbaijan 39.8 13.0 24.8 2.0
Bahamas, The 33.8 0.0 6.3 27.5
Bahrain 13.5 0.0 13.5 0.0
Bangladesh 34.4 30.5 0.0 3.9
Bangladesh Dhaka 34.4 30.5 0.0 3.9
Bangladesh Chittagong 34.4 30.5 0.0 3.9
Barbados 34.7 19.5 12.2 3.0
Belarus 54.8 12.9 39.0 2.9
Belgium 58.7 9.1 48.9 0.7
Belize 31.1 24.7 5.0 1.4
Benin 57.4 10.0 26.4 21.0
Bhutan 35.3 33.9 0.0 1.4
Bolivia 83.7 0.0 18.8 64.9
Bosnia and Herzegovina 22.6 7.2 13.5 1.9
Botswana 25.1 21.5 0.0 3.6
Brazil 68.4 24.9 40.2 3.3
Brazil So Paulo 68.0 25.1 40.2 2.7
Brazil Rio de Janeiro 69.0 24.6 40.2 4.2
Brunei Darussalam 8.7 0.8 7.9 0.0
Bulgaria 27.0 5.0 20.2 1.8
Burkina Faso 41.3 16.2 21.4 3.7
Burundi 40.3 28.9 10.2 1.2
Cabo Verde 36.6 18.6 17.6 0.4
Cambodia 21.0 19.5 0.5 1.0
Cameroon 57.7 38.9 18.3 0.5
Canada 21.0 3.9 12.8 4.3
Central African Republic 73.3 0.0 19.8 53.5
Chad 63.5 31.3 28.4 3.8
Chile 30.5 23.9 4.0 2.6
China 68.0 10.8 48.8 8.4
China Shanghai 67.7 10.9 48.0 8.8
China Beijing 68.5 10.7 49.6 8.2
Colombia 69.8 22.2 18.6 29.0
Comoros 216.5 32.1 0.0 184.4
Congo, Dem. Rep. 54.6 27.5 12.6 14.5
Congo, Rep. 54.3 0.0 31.3 23.0
Costa Rica 58.3 19.2 32.7 6.4
Cte d'Ivoire 51.3 8.8 23.3 19.2
Croatia 20.9 0.0 19.4 1.5
Cyprus 24.7 9.5 13.4 1.8
Czech Republic 50.0 9.1 38.4 2.5
Denmark 25.0 19.0 3.2 2.8
Djibouti 37.6 17.7 17.7 2.2
Dominica 35.2 24.4 7.9 2.9
Dominican Republic 42.4 22.6 18.6 1.2
Ecuador 32.5 16.3 13.7 2.5
Egypt, Arab Rep. 43.5 14.7 24.4 4.4
El Salvador 38.8 20.2 17.2 1.4
Equatorial Guinea 79.4 53.0 25.4 1.0
Eritrea 83.7 9.2 0.0 74.5
Estonia 48.7 7.9 38.8 2.0
Ethiopia 38.6 25.4 12.4 0.8
Fiji 33.1 20.3 12.7 0.1

128 Paying Taxes 2017. Appendix 3

Table 10: Total Tax Rate Total Tax Rate, % of commercial profit
Profit tax Labour tax Other taxes
Economy Total Tax Rate Total Tax Rate Total Tax Rate Total Tax Rate
Finland 38.1 11.7 25.1 1.3
France 62.8 0.4 53.5 8.9
Gabon 45.2 21.1 22.7 1.4
Gambia, The 51.3 6.1 12.7 32.5
Georgia 16.4 14.3 0.0 2.1
Germany 48.9 23.2 21.3 4.4
Ghana 32.7 18.0 14.7 0.0
Greece 50.7 22.4 27.7 0.6
Grenada 45.3 27.6 5.6 12.1
Guatemala 35.2 20.2 14.3 0.7
Guinea 68.3 0.0 26.4 41.9
Guinea-Bissau 45.5 15.1 24.8 5.6
Guyana 32.3 21.3 9.2 1.8
Haiti 40.3 23.8 12.4 4.1
Honduras 44.4 31.1 3.3 10.0
Hong Kong SAR, China 22.9 17.5 5.3 0.1
Hungary 46.5 9.9 34.3 2.3
Iceland 30.1 8.9 18.3 2.9
India 60.6 20.9 20.0 19.7
India Mumbai 60.6 20.9 20.0 19.7
India Delhi 60.6 20.9 20.0 19.7
Indonesia 30.6 16.9 10.3 3.4
Indonesia Jakarta 30.6 16.9 10.3 3.4
Indonesia Surabaya 30.6 16.9 10.3 3.4
Iran, Islamic Rep. 44.1 17.8 25.9 0.4
Iraq 27.8 14.3 13.5 0.0
Ireland 26.0 12.4 12.2 1.4
Israel 28.1 20.8 5.8 1.5
Italy 62.0 17.0 43.4 1.6
Jamaica 34.3 14.0 13.4 6.9
Japan 48.9 26.2 18.4 4.3
Japan Tokyo 48.9 26.2 18.4 4.3
Japan Osaka 48.9 26.2 18.4 4.3
Jordan 27.6 10.6 14.9 2.1
Kazakhstan 29.2 16.2 11.2 1.8
Kenya 37.4 30.1 1.9 5.4
Kiribati 32.7 24.3 8.4 0.0
Korea, Rep. 33.1 18.2 13.6 1.3
Kosovo 15.2 9.3 5.6 0.3
Kuwait 13.0 0.0 13.0 0.0
Kyrgyz Republic 29.0 6.4 19.5 3.1
Lao PDR 26.2 15.8 6.8 3.6
Latvia 35.9 6.3 26.6 3.0
Lebanon 30.3 6.1 23.8 0.4
Lesotho 13.6 10.8 0.0 2.8
Liberia 45.9 35.4 5.4 5.1
Libya 32.6 22.1 10.3 0.2
Lithuania 42.7 5.9 35.2 1.6
Luxembourg 20.8 4.6 15.7 0.5
Macedonia, FYR 13.0 11.0 0.0 2.0
Madagascar 38.1 16.3 20.3 1.5
Malawi 34.5 20.4 12.4 1.7
Malaysia 40.0 22.7 16.4 0.9
Maldives 30.2 13.1 7.9 9.2
Mali 48.3 10.1 34.3 3.9
Malta 43.8 32.4 10.9 0.5
Marshall Islands 64.8 0.0 11.8 53.0
Mauritania 71.3 0.0 23.2 48.1
Mauritius 21.8 10.4 7.7 3.7
Mexico 52.0 25.6 25.5 0.9
Mexico Mexico City 52.0 25.6 25.5 0.9
Mexico Monterrey 52.0 25.6 25.5 0.9

The data tables 129

Table 10: Total Tax Rate Total Tax Rate, % of commercial profit
Profit tax Labour tax Other taxes
Economy Total Tax Rate Total Tax Rate Total Tax Rate Total Tax Rate
Micronesia, Fed. Sts. 60.5 0.0 8.5 52.0
Moldova 40.4 8.9 31.1 0.4
Mongolia 24.7 10.3 12.4 2.0
Montenegro 22.2 8.2 13.3 0.7
Morocco 49.3 25.3 22.6 1.4
Mozambique 36.1 30.8 4.5 0.8
Myanmar 31.3 26.2 0.3 4.8
Namibia 20.7 16.7 1.9 2.1
Nepal 29.5 17.7 11.3 0.5
Netherlands 40.4 20.6 19.4 0.4
New Zealand 34.3 30.0 2.5 1.8
Nicaragua 60.8 17.6 22.6 20.6
Niger 48.2 21.2 21.7 5.3
Nigeria 34.3 20.3 13.5 0.5
Nigeria Lagos 34.3 20.3 13.5 0.5
Nigeria Kano 34.3 20.3 13.5 0.5
Norway 39.5 23.6 15.9 0.0
Oman 23.9 10.8 13.0 0.1
Pakistan 33.3 18.5 13.8 1.0
Pakistan Karachi 33.2 18.5 13.7 1.0
Pakistan Lahore 33.5 18.4 14.0 1.1
Palau 75.4 65.8 9.5 0.1
Panama 37.2 12.4 20.0 4.8
Papua New Guinea 39.3 23.2 11.7 4.4
Paraguay 35.0 9.6 18.6 6.8
Peru 35.6 21.4 11.0 3.2
Philippines 42.9 20.3 8.7 13.9
Poland 40.4 14.5 24.9 1.0
Portugal 39.8 12.5 26.8 0.5
Puerto Rico (U.S.) 62.3 28.6 13.5 20.2
Qatar 11.3 0.0 11.3 0.0
Romania 38.4 11.6 25.8 1.0
Russian Federation 47.4 8.8 36.1 2.5
Russian Federation Moscow 47.5 8.8 36.1 2.6
Russian Federation Saint Petersburg 47.2 8.9 36.1 2.2
Rwanda 33.0 25.8 5.6 1.6
Samoa 18.5 11.2 7.3 0.0
San Marino 35.4 5.1 30.0 0.3
So Tom and Prncipe 37.4 19.2 6.8 11.4
Saudi Arabia 15.7 2.2 13.5 0.0
Senegal 45.1 16.2 23.6 5.3
Serbia 39.7 16.0 20.2 3.5
Seychelles 30.1 18.8 2.3 9.0
Sierra Leone 31.0 18.8 11.3 0.9
Singapore 19.1 1.8 16.2 1.1
Slovak Republic 51.6 10.5 39.7 1.4
Slovenia 31.0 12.7 18.2 0.1
Solomon Islands 32.0 23.3 8.5 0.2
South Africa 28.8 21.7 4.0 3.1
South Sudan 29.1 6.9 19.2 3.0
Spain 49.0 12.4 35.9 0.7
Sri Lanka 55.2 1.2 16.9 37.1
St. Kitts and Nevis 49.7 30.5 11.2 8.0
St. Lucia 34.7 25.8 5.6 3.3
St. Vincent and the Grenadines 39.3 29.8 6.2 3.3
Sudan 45.4 11.5 19.2 14.7
Suriname 27.9 27.9 0.0 0.0
Swaziland 35.1 25.5 5.5 4.1
Sweden 49.1 13.1 35.4 0.6
Switzerland 28.8 9.3 17.7 1.8
Syrian Arab Republic 42.7 23.0 19.3 0.4
Taiwan, China 34.5 12.7 18.4 3.4

130 Paying Taxes 2017. Appendix 3

Table 10: Total Tax Rate Total Tax Rate, % of commercial profit
Profit tax Labour tax Other taxes
Economy Total Tax Rate Total Tax Rate Total Tax Rate Total Tax Rate
Tajikistan 65.2 17.7 28.5 19.0
Tanzania 43.9 20.8 17.5 5.6
Thailand 32.6 21.6 5.4 5.6
Timor-Leste 11.2 11.2 0.0 0.0
Togo 48.5 10.7 23.1 14.7
Tonga 30.1 23.8 5.6 0.7
Trinidad and Tobago 32.2 21.9 8.5 1.8
Tunisia 60.2 13.1 25.3 21.8
Turkey 41.1 18.2 19.9 3.0
Uganda 33.5 22.1 11.3 0.1
Ukraine 51.9 8.7 43.1 0.1
United Arab Emirates 15.9 0.0 14.1 1.8
United Kingdom 30.9 18.3 10.9 1.7
United States 44.0 28.1 9.8 6.1
United States New York 46.0 27.3 10.0 8.7
United States Los Angeles 40.9 29.3 9.5 2.1
Uruguay 41.8 23.6 15.6 2.6
Uzbekistan 38.1 11.5 24.9 1.7
Vanuatu 8.5 0.0 4.5 4.0
Venezuela, RB 64.7 9.5 18.0 37.2
Vietnam 39.4 14.4 24.8 0.2
West Bank and Gaza 15.3 15.0 0.0 0.3
Yemen, Rep. 33.1 20.0 11.3 1.8
Zambia 18.6 2.0 10.4 6.2
Zimbabwe 32.8 18.8 5.6 8.4

Note: There is no data for Somalia as there is currently no practice yet.

The data tables 131

Table 11: Time to comply Number of hours
Economy Total tax time Corporate income tax time Labour tax time Consumption tax time
Afghanistan 275 77 120 78
Albania 261 105 66 90
Algeria 265 122 76 67
Angola 287 80 125 82
Antigua and Barbuda 207 23 136 48
Argentina 359 91 84 184
Armenia 313 113 103 97
Australia 105 37 18 50
Austria 131 46 50 35
Azerbaijan 195 60 78 57
Bahamas, The 233 10 66 157
Bahrain 27 0 27 0
Bangladesh 435 144 120 171
Bangladesh Dhaka 435 144 120 171
Bangladesh Chittagong 435 144 120 171
Barbados 237 27 162 48
Belarus 176 78 59 39
Belgium 161 21 40 100
Belize 147 27 60 60
Benin 270 30 120 120
Bhutan 85 53 32 0
Bolivia 1025 110 507 408
Bosnia and Herzegovina 411 68 81 262
Botswana 152 40 40 72
Brazil 2038 486 363 1189
Brazil So Paulo 2038 486 363 1189
Brazil Rio de Janeiro 2038 486 363 1189
Brunei Darussalam 77 53 24 0
Bulgaria 453 32 256 165
Burkina Faso 270 30 120 120
Burundi 232 76 45 111
Cabo Verde 180 35 85 60
Cambodia 173 23 84 66
Cameroon 630 174 162 294
Canada 131 45 36 50
Central African Republic 483 24 240 219
Chad 766 300 216 250
Chile 291 42 125 124
China 259 62 109 88
China Shanghai 263 63 110 90
China Beijing 254 60 107 87
Colombia 239 86 87 66
Comoros 100 4 48 48
Congo, Dem. Rep. 346 84 154 108
Congo, Rep. 602 275 146 181
Costa Rica 151 18 59 74
Cte d'Ivoire 270 30 120 120
Croatia 206 58 96 52
Cyprus 127 23 65 39
Czech Republic 234 53 87 94
Denmark 130 25 65 40
Djibouti 82 30 36 16
Dominica 117 15 48 54
Dominican Republic 317 74 80 163
Ecuador 664 118 306 240
Egypt, Arab Rep. 392 69 165 158
El Salvador 248 80 84 84
Equatorial Guinea 492 145 160 187
Eritrea 216 24 96 96
Estonia 84 20 31 33
Ethiopia 306 120 114 72
Fiji 247 49 101 97
Finland 93 21 48 24

132 Paying Taxes 2017. Appendix 3

Table 11: Time to comply Number of hours
Economy Total tax time Corporate income tax time Labour tax time Consumption tax time
France 139 28 80 31
Gabon 488 137 131 220
Gambia, The 326 40 96 190
Georgia 270 120 56 94
Germany 218 41 134 43
Ghana 224 40 88 96
Greece 193 78 46 69
Grenada 140 32 72 36
Guatemala 256 31 126 99
Guinea 440 32 192 216
Guinea-Bissau 208 160 24 24
Guyana 256 41 48 167
Haiti 184 40 72 72
Honduras 224 35 93 96
Hong Kong SAR, China 74 50 24 0
Hungary 277 35 146 96
Iceland 140 40 60 40
India 241 45 91 105
India Mumbai 241 45 91 105
India Delhi 241 45 91 105
Indonesia 221 75 56 90
Indonesia Jakarta 221 75 56 90
Indonesia Surabaya 221 75 56 90
Iran, Islamic Rep. 344 32 240 72
Iraq 312 24 288 0
Ireland 82 12 40 30
Israel 235 110 60 65
Italy 240 39 169 32
Jamaica 268 42 168 58
Japan 175 62 92 21
Japan Tokyo 175 62 92 21
Japan Osaka 175 62 92 21
Jordan 145 10 90 45
Kazakhstan 178 55 70 53
Kenya 196 52 63 81
Kiribati 168 48 72 48
Korea, Rep. 188 83 80 25
Kosovo 155 29 39 87
Kuwait 98 0 98 0
Kyrgyz Republic 225 59 71 95
Lao PDR 362 138 42 182
Latvia 169 23 80 66
Lebanon 181 40 100 41
Lesotho 324 70 104 150
Liberia 140 57 53 30
Libya 889 679 210 0
Lithuania 171 28 85 58
Luxembourg 55 19 14 22
Macedonia, FYR 119 19 56 44
Madagascar 183 9 72 102
Malawi 178 67 78 33
Malaysia 164 26 50 88
Maldives 406 101 88 217
Mali 270 30 120 120
Malta 139 23 92 24
Marshall Islands 120 32 88 0
Mauritania 724 120 124 480
Mauritius 152 36 48 68
Mexico 286 122 64 100
Mexico Mexico City 286 122 64 100
Mexico Monterrey 286 122 64 100
Micronesia, Fed. Sts. 128 32 96 0
Moldova 181 42 84 55

The data tables 133

Table 11: Time to comply Number of hours
Economy Total tax time Corporate income tax time Labour tax time Consumption tax time
Mongolia 148 46 48 54
Montenegro 300 43 93 164
Morocco 211 68 41 102
Mozambique 200 50 30 120
Myanmar 282 64 111 107
Namibia 302 40 52 210
Nepal 339 125 84 130
Netherlands 119 21 64 34
New Zealand 152 34 59 59
Nicaragua 201 63 76 62
Niger 270 30 120 120
Nigeria 908 378 379 151
Nigeria Lagos 956 398 396 162
Nigeria Kano 747 310 320 117
Norway 83 24 15 44
Oman 68 56 12 0
Pakistan 312 40 40 232
Pakistan Karachi 312 40 40 232
Pakistan Lahore 312 40 40 232
Palau 142 46 96 0
Panama 417 83 144 190
Papua New Guinea 207 153 8 46
Paraguay 378 138 96 144
Peru 260 39 111 110
Philippines 186 39 37 110
Poland 271 70 103 98
Portugal 243 63 90 90
Puerto Rico (U.S.) 218 80 60 78
Qatar 41 5 36 0
Romania 161 25 82 54
Russian Federation 168 53 76 39
Russian Federation Moscow 168 53 76 39
Russian Federation Saint Petersburg 168 53 76 39
Rwanda 124 20 45 59
Samoa 224 48 96 80
San Marino 52 4 48 0
So Tom and Prncipe 424 40 192 192
Saudi Arabia 67 33 34 0
Senegal 441 98 88 255
Serbia 226 38 103 85
Seychelles 85 37 36 12
Sierra Leone 343 16 157 170
Singapore 67 24 13 30
Slovak Republic 192 46 62 84
Slovenia 245 86 90 69
Solomon Islands 80 8 30 42
South Africa 203 96 52 55
South Sudan 210 54 78 78
Spain 152 33 84 35
Sri Lanka 179 16 21 142
St. Kitts and Nevis 203 27 128 48
St. Lucia 110 11 51 48
St. Vincent and the Grenadines 108 14 49 45
Sudan 180 70 70 40
Suriname 199 48 24 127
Swaziland 122 8 60 54
Sweden 122 50 36 36
Switzerland 63 15 40 8
Syrian Arab Republic 336 300 36 0
Taiwan, China 221 161 27 33
Tajikistan 258 74 48 136
Tanzania 195 62 66 67
Thailand 266 160 48 58

134 Paying Taxes 2017. Appendix 3

Table 11: Time to comply Number of hours
Economy Total tax time Corporate income tax time Labour tax time Consumption tax time
Timor-Leste 276 132 144 0
Togo 216 24 96 96
Tonga 200 8 48 144
Trinidad and Tobago 210 45 75 90
Tunisia 144 64 30 50
Turkey 217 46 80 91
Uganda 195 39 66 90
Ukraine 356 57 100 199
United Arab Emirates 12 0 12 0
United Kingdom 110 37 48 25
United States 175 87 55 33
United States New York 175 87 55 33
United States Los Angeles 175 87 55 33
Uruguay 271 77 96 98
Uzbekistan 193 66 57 70
Vanuatu 120 0 24 96
Venezuela, RB 792 120 288 384
Vietnam 540 132 189 219
West Bank and Gaza 162 18 96 48
Yemen, Rep. 248 56 72 120
Zambia 186 52 62 72
Zimbabwe 242 78 96 68
Note: There is no data for Somalia as there is currently no practice yet.

The data tables 135

Table 12: Tax payments Number of payments

Economy Total tax payments Profit tax payments Labour tax payments Other taxes payments
Afghanistan 20 1 12 7
Albania 34 5 12 17
Algeria 27 0 12 15
Angola 31 2 12 17
Antigua and Barbuda 57 13 24 20
Argentina 9 1 1 7
Armenia 14 1 1 12
Australia 11 1 4 6
Austria 12 1 3 8
Azerbaijan 6 1 1 4
Bahamas, The 31 0 12 19
Bahrain 13 0 12 1
Bangladesh 33 5 12 16
Bangladesh Dhaka 33 5 12 16
Bangladesh Chittagong 33 5 12 16
Barbados 28 3 12 13
Belarus 7 1 2 4
Belgium 11 1 2 8
Belize 29 12 1 16
Benin 57 5 24 28
Bhutan 18 2 12 4
Bolivia 42 1 12 29
Bosnia and Herzegovina 34 12 1 21
Botswana 34 6 13 15
Brazil 10 2 2 6
Brazil So Paulo 10 2 2 6
Brazil Rio de Janeiro 9 2 2 5
Brunei Darussalam 16 1 12 3
Bulgaria 14 1 1 12
Burkina Faso 45 1 24 20
Burundi 25 5 4 16
Cabo Verde 30 3 13 14
Cambodia 40 12 12 16
Cameroon 44 13 12 19
Canada 8 1 3 4
Central African Republic 56 4 24 28
Chad 54 12 24 18
Chile 7 1 1 5
China 9 3 1 5
China Shanghai 9 3 1 5
China Beijing 9 3 1 5
Colombia 12 2 1 9
Comoros 33 3 12 18
Congo, Dem. Rep. 52 1 36 15
Congo, Rep. 50 5 25 20
Costa Rica 10 1 2 7
Cte d'Ivoire 63 3 24 36
Croatia 31 1 1 29
Cyprus 28 2 12 14
Czech Republic 8 1 2 5
Denmark 10 3 1 6
Djibouti 36 5 12 19
Dominica 37 5 12 20
Dominican Republic 7 1 2 4
Ecuador 8 2 1 5
Egypt, Arab Rep. 29 1 12 16
El Salvador 41 13 12 16
Equatorial Guinea 46 1 24 21
Eritrea 30 2 12 16
Estonia 8 1 0 7
Ethiopia 30 2 12 16
Fiji 38 5 18 15

136 Paying Taxes 2017. Appendix 3

Table 12: Tax payments Number of payments

Economy Total tax payments Profit tax payments Labour tax payments Other taxes payments
Finland 8 1 3 4
France 8 1 2 5
Gabon 26 3 4 19
Gambia, The 49 5 13 31
Georgia 5 1 1 3
Germany 9 2 1 6
Ghana 33 7 12 14
Greece 8 1 1 6
Grenada 42 13 12 17
Guatemala 8 2 1 5
Guinea 57 3 36 18
Guinea-Bissau 46 5 12 29
Guyana 35 6 12 17
Haiti 47 6 25 16
Honduras 48 5 13 30
Hong Kong SAR, China 3 1 1 1
Hungary 11 2 2 7
Iceland 21 1 13 7
India 25 1 16 8
India Mumbai 25 1 16 8
India Delhi 25 1 16 8
Indonesia 43 13 14 16
Indonesia Jakarta 43 13 14 16
Indonesia Surabaya 43 13 14 16
Iran, Islamic Rep. 20 1 12 7
Iraq 14 1 12 1
Ireland 9 1 1 7
Israel 33 2 12 19
Italy 14 2 1 11
Jamaica 11 1 1 9
Japan 14 3 2 9
Japan Tokyo 14 3 2 9
Japan Osaka 14 3 2 9
Jordan 25 1 12 12
Kazakhstan 7 1 1 5
Kenya 31 6 14 11
Kiribati 11 5 2 4
Korea, Rep. 12 2 2 8
Kosovo 10 5 1 4
Kuwait 12 0 12 0
Kyrgyz Republic 51 4 12 35
Lao PDR 35 4 12 19
Latvia 7 1 1 5
Lebanon 20 1 12 7
Lesotho 32 4 12 16
Liberia 33 5 12 16
Libya 19 4 12 3
Lithuania 11 1 2 8
Luxembourg 23 5 12 6
Macedonia, FYR 7 1 1 5
Madagascar 23 1 8 14
Malawi 35 5 13 17
Malaysia 9 2 2 5
Maldives 30 3 12 15
Mali 35 4 24 7
Malta 8 2 1 5
Marshall Islands 9 0 4 5
Mauritania 45 1 21 23
Mauritius 8 1 1 6
Mexico 6 1 2 3
Mexico Mexico City 6 1 2 3
Mexico Monterrey 6 1 2 3

The data tables 137

Table 12: Tax payments Number of payments

Economy Total tax payments Profit tax payments Labour tax payments Other taxes payments
Micronesia, Fed. Sts. 21 0 4 17
Moldova 10 1 3 6
Mongolia 19 1 12 6
Montenegro 18 1 13 4
Morocco 6 1 1 4
Mozambique 37 7 12 18
Myanmar 31 5 12 14
Namibia 27 3 13 11
Nepal 34 4 12 18
Netherlands 9 1 1 7
New Zealand 7 1 2 4
Nicaragua 42 1 24 17
Niger 41 3 13 25
Nigeria 59 2 38 19
Nigeria Lagos 59 2 38 19
Nigeria Kano 59 2 38 19
Norway 4 1 1 2
Oman 15 2 12 1
Pakistan 47 5 25 17
Pakistan Karachi 47 5 25 17
Pakistan Lahore 47 5 25 17
Palau 11 4 4 3
Panama 52 5 16 31
Papua New Guinea 32 1 13 18
Paraguay 20 1 12 7
Peru 9 1 2 6
Philippines 28 1 17 10
Poland 7 1 2 4
Portugal 8 1 1 6
Puerto Rico (U.S.) 16 5 6 5
Qatar 4 1 1 2
Romania 14 1 1 12
Russian Federation 7 1 2 4
Russian Federation Moscow 7 1 2 4
Russian Federation Saint Petersburg 7 1 2 4
Rwanda 29 4 8 17
Samoa 37 5 24 8
San Marino 18 2 12 4
So Tom and Prncipe 46 4 12 30
Saudi Arabia 3 1 1 1
Senegal 58 3 36 19
Serbia 33 1 1 31
Seychelles 29 13 12 4
Sierra Leone 34 6 12 16
Singapore 5 1 1 3
Slovak Republic 8 1 1 6
Slovenia 10 1 1 8
Solomon Islands 34 5 12 17
South Africa 7 1 2 4
South Sudan 37 5 12 20
Spain 8 1 1 6
Sri Lanka 47 5 13 29
St. Kitts and Nevis 39 5 12 22
St. Lucia 35 4 12 19
St. Vincent and the Grenadines 36 4 12 20
Sudan 42 2 12 28
Suriname 30 5 12 13
Swaziland 33 2 13 18
Sweden 6 1 1 4
Switzerland 19 2 7 10
Syrian Arab Republic 20 2 12 6
Taiwan, China 11 2 3 6

138 Paying Taxes 2017. Appendix 3

Table 12: Tax payments Number of payments

Economy Total tax payments Profit tax payments Labour tax payments Other taxes payments
Tajikistan 12 1 1 10
Tanzania 53 5 29 19
Thailand 21 2 13 6
Timor-Leste 18 5 12 1
Togo 49 5 24 20
Tonga 30 1 12 17
Trinidad and Tobago 39 4 24 11
Tunisia 8 1 4 3
Turkey 11 1 1 9
Uganda 31 3 12 16
Ukraine 5 1 1 3
United Arab Emirates 4 0 1 3
United Kingdom 8 1 1 6
United States 11 2 4 5
United States New York 11 2 4 5
United States Los Angeles 10 3 3 4
Uruguay 20 1 13 6
Uzbekistan 46 8 24 14
Vanuatu 31 0 12 19
Venezuela, RB 70 14 28 28
Vietnam 31 6 12 13
West Bank and Gaza 28 3 12 13
Yemen, Rep. 44 1 24 19
Zambia 26 5 13 8
Zimbabwe 51 5 16 30

Note: There is no data for Somalia as there is currently no practice yet.

The data tables 139

Table 13: Post-filing index and components
Post-filing Time to comply Time to obtain Time to comply Time to complete
index (DTF with VAT refund VAT refund with a CIT audit a CIT audit
Economy score) (hours) (weeks) (hours) (weeks)
Afghanistan 0.45 VAT does not exist VAT does not exist 211.5 31.7
Albania 82.97 9.0 27.7 3.0 0.0
Algeria 49.31 No refund No refund 3.0 0.0
Angola 27.96 VAT does not exist VAT does not exist 44.5 20.9
Antigua and Barbuda 49.08 No refund No refund 3.5 0.0
Argentina 16.97 No refund No refund 19.0 37.7
Armenia 49.08 No refund No refund 3.5 0.0
Australia 95.35 4.5 7.5 2.3 0.0
Austria 98.45 1.5 3.2 3.3 0.0
Azerbaijan 81.00 7.5 21.2 10.0 3.4
Bahamas, The Not scored No practice yet No practice yet CIT does not exist CIT does not exist
Bahrain Not scored VAT does not exist VAT does not exist CIT does not exist CIT does not exist
Bangladesh 43.57 53.0 20.2 40.0 7.1
Bangladesh Dhaka 43.57 53.0 20.2 40.0 7.1
Bangladesh Chittagong 43.57 53.0 20.2 40.0 7.1
Barbados 73.62 0.0 56.3 4.5 0.0
Belarus 50.00 No refund No refund 1.5 0.0
Belgium 88.28 5.0 18.5 5.5 0.0
Belize 97.60 2.5 4.2 3.0 0.0
Benin 48.85 No refund No refund 4.0 0.0
Bhutan 95.95 VAT does not exist VAT does not exist 3.0 1.7
Bolivia 49.08 No refund No refund 3.5 0.0
Bosnia and Herzegovina 47.94 40.0 18.0 30.5 14.9
Botswana 89.89 10.0 10.5 5.0 0.0
Brazil 8.03 No refund No refund 38.5 35.1
Brazil So Paulo 8.03 No refund No refund 38.5 35.1
Brazil Rio de Janeiro 8.03 No refund No refund 38.5 35.1
Brunei Darussalam 15.63 VAT does not exist VAT does not exist 140.0
22.0
Bulgaria 73.30 15.0 19.1 12.5 8.3
Burkina Faso 48.85 No refund No refund 4.0 0.0
Burundi 33.99 No refund No refund 15.0 12.6
Cabo Verde 70.62 6.0 106.2 4.5 0.0
Cambodia 28.73 20.0 50.3 31.0 35.1
Cameroon 48.39 No refund No refund 5.0 0.0
Canada 76.44 7.5 9.9 16.0 12.7
Central African Republic 11.83 No refund No refund 66.0 16.9
Chad 16.42 No refund No refund 46.0 16.9
Chile 5.58 No refund No refund 65.0 24.9
China 48.62 No refund No refund 4.5 0.0
China Shanghai 48.62 No refund No refund 4.5 0.0
China Beijing 48.62 No refund No refund 4.5 0.0
Colombia 47.48 No refund No refund 7.0 0.0
Comoros 51.53 VAT does not exist VAT does not exist 12.0 24.9
Congo, Dem. Rep. 29.97 No refund No refund 24.0 12.4
Congo, Rep. 14.72 No refund No refund 38.5 23.4

*VAT does not exist for the case study purchase not scored.

A time of 0.0 indicates that an audit is unlikely and so the economy receives the best distance to frontier score of 100 for this component of the post-filing index.
Where an economys data sits within the highest 5% of the post-filing components range, these economies are allocated the worst distance to frontier score


of 0 for that component of the post-filing index.

Note: Where there is No practice yet, VAT does not exist or CIT does not exist, these components of the post-filing index are ignored and the remaining
components are averaged to create the post-filing score. Where there is No refund, these economies are allocated the worst distance to frontier score of nil
for that component of the post-filing index.

140 Paying Taxes 2017. Appendix 3

Table 13: Post-filing index and components
Post-filing Time to comply Time to obtain Time to comply Time to complete
index (DTF with VAT refund VAT refund with a CIT audit a CIT audit
Economy score) (hours) (weeks) (hours) (weeks)
Costa Rica 91.11 5.5 14.5 3.0 0.0
Cte d'Ivoire 44.27 No refund No refund 14.0 0.0
Croatia 97.88 0.0 6.2 3.0 0.0
Cyprus 91.53 6.0 12.2 4.0 0.0
Czech Republic 94.29 4.0 9.5 3.0 0.0
Denmark 92.63 8.0 7.1 4.8 0.0
Djibouti 52.18 4.0 23.0 45.0 20.9
Dominica 49.54 No refund No refund 2.5 0.0
Dominican Republic 14.06 No refund No refund 61.5
14.0
Ecuador 49.31 No refund No refund 3.0 0.0
Egypt, Arab Rep. 29.05 No refund No refund 26.0 12.4
El Salvador 10.09 No refund No refund 34.0 47.7
Equatorial Guinea 83.94 VAT does not exist* VAT does not exist* 19.0 0.0
Eritrea 96.79 VAT does not exist VAT does not exist 5.0 0.0
Estonia 98.55 2.3 3.9 1.5 0.0
Ethiopia 90.57 8.0 10.2 6.0 0.0
Fiji 68.91 73.0 10.6 7.0 0.0
Finland 93.09 5.0 6.2 8.0 0.0
France 92.42 10.0 6.2 4.0 0.0
Gabon 45.56 14.5 35.9 15.5 33.7
Gambia, The 48.43 38.5 25.7 29.5 11.0
Georgia 87.22 20.5 8.5 1.5 0.0
Germany 97.45 0.0 5.2 5.0 0.0
Ghana 37.92 No refund No refund 12.5 9.0
Greece 79.27 16.5 27.2 3.5 0.0
Grenada 48.39 No refund No refund 5.0 0.0
Guatemala 39.27 No refund No refund 16.0 5.2
Guinea 12.31 No refund No refund 44.0 23.3
Guinea-Bissau 48.39 No refund No refund 5.0 0.0
Guyana 31.01 No refund No refund 30.5 7.3
Haiti 26.79 No refund No refund 37.5 8.6
Honduras 48.07 20.0 54.2 13.0 15.4
Hong Kong SAR, China 98.62 VAT does not exist VAT does not exist 3.0 0.0
Hungary 75.79 15.0 13.7 12.0 8.7
Iceland 89.15 3.0 20.9 3.3 0.0
India 4.27 No refund No refund 54.0 27.7
India Mumbai 4.27 No refund No refund 54.0 27.7
India Delhi 4.27 No refund No refund 54.0 27.7
Indonesia 76.49 18.0 30.9 4.0 0.0
Indonesia Jakarta 76.49 18.0 30.9 4.0 0.0
Indonesia Surabaya 76.49 18.0 30.9 4.0 0.0
Iran, Islamic Rep. 78.81 9.0 33.5 6.0 0.0
Iraq 84.86 VAT does not exist VAT does not exist 18.0 0.0
Ireland 92.70 1.0 16.3 2.5 0.0
Israel 65.53 34.0 31.3 10.0 0.0

*VAT does not exist for the case study purchase not scored.

A time of 0.0 indicates that an audit is unlikely and so the economy receives the best distance to frontier score of 100 for this component of the post-filing index.
Where an economys data sits within the highest 5% of the post-filing components range, these economies are allocated the worst distance to frontier score


of 0 for that component of the post-filing index.

Note: Where there is No practice yet, VAT does not exist or CIT does not exist, these components of the post-filing index are ignored and the remaining
components are averaged to create the post-filing score. Where there is No refund, these economies are allocated the worst distance to frontier score of nil
for that component of the post-filing index.

The data tables 141

Table 13: Post-filing index and components
Post-filing Time to comply Time to obtain Time to comply Time to complete
index (DTF with VAT refund VAT refund with a CIT audit a CIT audit
Economy score) (hours) (weeks) (hours) (weeks)
Italy 48.39 51.0 86.0 5.0 0.0
Jamaica 19.45 40.0 63.3
24.5 61.1
Japan 78.91 6.0 10.5 24.0 5.4
Japan Tokyo 78.91 6.0 10.5 24.0 5.4
Japan Osaka 78.91 6.0 10.5 24.0 5.4
Jordan 49.31 No refund No refund 3.0 0.0
Kazakhstan 49.08 No refund No refund 3.5 0.0
Kenya 32.12 No refund No refund 21.5 11.1
Kiribati 41.30 No refund No refund 10.0 6.1
Korea, Rep. 92.58 0.0 10.5 10.0 0.0
Kosovo 61.00 30.0 16.8 22.0 10.3
Kuwait Not scored VAT does not exist VAT does not exist CIT does not exist CIT does not exist
Kyrgyz Republic 36.93 No refund No refund 21.0 5.3
Lao PDR 29.76 No refund No refund 13.5 18.9
Latvia 98.11 0.0 6.2 2.5 0.0
Lebanon 63.32 45.0 27.4 7.0 0.0
Lesotho 78.94 11.5 19.2 12.0 3.6
Liberia 96.79 VAT does not exist VAT does not exist 5.0 0.0
Libya 90.83 VAT does not exist VAT does not exist 11.5 0.0
Lithuania 97.57 2.0 6.2 1.5 0.0
Luxembourg 89.94 10.5 10.3 4.5 0.0
Macedonia, FYR 84.17 10.0 25.2 2.0 0.0
Madagascar 30.21 No refund No refund 13.5 18.3
Malawi 63.35 30.5 45.2 4.0 0.0
Malaysia 64.31 No practice yet No practice yet 5.3 20.6
Maldives 45.87 No refund No refund 10.5 0.0
Mali 49.54 No refund No refund 2.5 0.0
Malta 85.95 0.0 28.5 5.5 0.0
Marshall Islands Not scored VAT does not exist VAT does not exist CIT does not exist CIT does not exist
Mauritania 18.98 No refund No refund 19.0 29.4
Mauritius 56.08 7.0 20.3 21.0 29.7
Mexico 42.64 20.0 37.2 14.5 35.0
Mexico Mexico City 42.64 20.0 37.2 14.5 35.0
Mexico Monterrey 42.64 20.0 37.2 14.5 35.0
Micronesia, Fed. Sts. Not scored VAT does not exist VAT does not exist CIT does not exist CIT does not exist
Moldova 91.36 8.3 11.6 2.5 0.0
Mongolia 78.73 20.0 24.2 4.0 0.0
Montenegro 85.48 4.0 14.2 8.0 5.4
Morocco 97.71 VAT does not exist* VAT does not exist* 4.0 0.0
Mozambique 62.49 28.0 10.5 31.0 8.3
Myanmar 46.10 No refund No refund 10.0 0.0
Namibia 78.99 30.0 12.3 5.0 0.0
Nepal 33.48 No refund No refund 29.0 5.0
Netherlands 93.40 0.0 14.5 4.0 0.0
New Zealand 96.90 2.0 5.2 4.0 0.0

*VAT does not exist for the case study purchase not scored.

A time of 0.0 indicates that an audit is unlikely and so the economy receives the best distance to frontier score of 100 for this component of the post-filing index.
Where an economys data sits within the highest 5% of the post-filing components range, these economies are allocated the worst distance to frontier score


of 0 for that component of the post-filing index.

Note: Where there is No practice yet, VAT does not exist or CIT does not exist, these components of the post-filing index are ignored and the remaining
components are averaged to create the post-filing score. Where there is No refund, these economies are allocated the worst distance to frontier score of nil
for that component of the post-filing index.

142 Paying Taxes 2017. Appendix 3

Table 13: Post-filing index and components
Post-filing Time to comply Time to obtain Time to comply Time to complete
index (DTF with VAT refund VAT refund with a CIT audit a CIT audit
Economy score) (hours) (weeks) (hours) (weeks)
Nicaragua 13.62 No refund No refund 90.0 14.6
Niger 30.16 43.5 54.2 42.0 6.3
Nigeria 17.19 No refund No refund 65.0 10.0
Nigeria Lagos 17.19 No refund No refund 65.0 10.0
Nigeria Kano 17.19 No refund No refund 65.0 10.0
Norway 67.99 9.0 10.5 11.5 24.9
Oman 85.32 VAT does not exist VAT does not exist 17.5 0.0
Pakistan 37.61 No refund No refund 28.5 0.0
Pakistan Karachi 37.61 No refund No refund 28.5 0.0
Pakistan Lahore 37.61 No refund No refund 28.5 0.0
Palau Not scored VAT does not exist VAT does not exist CIT does not exist CIT does not exist
Panama 46.56 No refund No refund 9.0 0.0
Papua New Guinea 77.12 3.0 44.2 5.0 0.0
Paraguay 10.22 No refund No refund 51.0 21.9
Peru 32.17 No refund No refund 17.5 13.4
Philippines 49.77 No refund No refund 2.0 0.0
Poland 92.18 8.0 10.2 2.5 0.0
Portugal 92.71 4.0 14.2 1.5 0.0
Puerto Rico (U.S.) 41.42 VAT does not exist VAT does not exist 42.0 13.7
Qatar Not scored VAT does not exist VAT does not exist CIT does not exist CIT does not exist
Romania 79.62 22.0 22.2 2.0 0.0
Russian Federation 87.59 7.2 20.5 2.5 0.0
Russian Federation Moscow 87.59 7.2 20.5 2.5 0.0
Russian Federation Saint Petersburg 87.59 7.2 20.5 2.5 0.0
Rwanda 83.29 9.0 26.6 3.5 0.0
Samoa 91.42 1.0 12.3 9.5 0.0
San Marino 98.62 VAT does not exist VAT does not exist 3.0 0.0
So Tom and Prncipe 90.37 VAT does not exist VAT does not exist 12.0 0.0
Saudi Arabia 10.94 VAT does not exist VAT does not exist 71.3 25.0
Senegal 54.32 34.0 52.2 12.5 0.0
Serbia 94.00 4.0 8.2 5.0 0.0
Seychelles 93.19 0.0 16.8 2.0 0.0
Sierra Leone 94.50 VAT does not exist* VAT does not exist* 7.5 0.0
Singapore 73.43 4.5 18.5 17.0 12.6
Slovak Republic 89.91 5.0 18.5 2.0 0.0
Slovenia 95.03 3.0 5.2 7.0 0.0
Solomon Islands 99.08 VAT does not exist VAT does not exist 2.5 0.0
South Africa 58.61 10.0 26.0 14.0 25.1
South Sudan 94.04 VAT does not exist VAT does not exist 8.0 0.0
Spain 92.55 0.0 18.2 2.0 0.0
Sri Lanka 48.85 No refund No refund 4.0 0.0
St. Kitts and Nevis 49.54 No refund No refund 2.5 0.0
St. Lucia 87.24 8.3 19.7 3.0 0.0
St. Vincent and the Grenadines 65.07 10.5 36.2 23.0 5.0
Sudan 46.56 No refund No refund 9.0 0.0

*VAT does not exist for the case study purchase not scored.

A time of 0.0 indicates that an audit is unlikely and so the economy receives the best distance to frontier score of 100 for this component of the post-filing index.
Where an economys data sits within the highest 5% of the post-filing components range, these economies are allocated the worst distance to frontier score


of 0 for that component of the post-filing index.

Note: Where there is No practice yet, VAT does not exist or CIT does not exist, these components of the post-filing index are ignored and the remaining
components are averaged to create the post-filing score. Where there is No refund, these economies are allocated the worst distance to frontier score of nil
for that component of the post-filing index.

The data tables 143

Table 13: Post-filing index and components
Post-filing Time to comply Time to obtain Time to comply Time to complete
index (DTF with VAT refund VAT refund with a CIT audit a CIT audit
Economy score) (hours) (weeks) (hours) (weeks)
Suriname 48.39 No refund No refund 5.0 0.0
Swaziland 72.54 16.0 10.9 21.0 8.7
Sweden 90.75 10.5 8.2 5.0 0.0
Switzerland 86.56 1.5 14.5 9.5 4.6
Syrian Arab Republic 90.37 VAT does not exist VAT does not exist 12.0 0.0
Taiwan, China 90.82 4.5 12.3 7.0 0.0
Tajikistan 41.75 No refund No refund 10.0 5.6
Tanzania 47.94 No refund No refund 6.0 0.0
Thailand 47.32 16.0 27.0 31.5 24.9
Timor-Leste 2.29 VAT does not exist VAT does not exist 53.5 51.7
Togo 27.79 No refund No refund 38.0 7.0
Tonga 68.90 41.5 23.7 2.5 0.0
Trinidad and Tobago 22.67 70.0 29.3 55.0 19.4
Tunisia 49.77 No refund No refund 2.0 0.0
Turkey 3.90 No refund No refund 47.5 32.1
Uganda 78.44 9.0 9.2 20.5 7.0
Ukraine 79.26 16.0 28.2 3.0 0.0
United Arab Emirates Not scored VAT does not exist VAT does not exist CIT does not exist CIT does not exist
United Kingdom 87.44 1.5 9.5 6.5 8.3
United States 93.12 VAT does not exist VAT does not exist 9.0 0.0
United States New York City 93.12 VAT does not exist VAT does not exist 9.0 0.0
United States Los Angeles 93.12 VAT does not exist VAT does not exist 9.0 0.0
Uruguay 49.31 No refund No refund 3.0 0.0
Uzbekistan 47.02 No refund No refund 8.0 0.0
Vanuatu 80.04 4.0 19.7 CIT does not exist CIT does not exist
Venezuela, RB 48.39 No refund No refund 5.0 0.0
Vietnam 38.94 No refund No refund 20.3 3.1
West Bank and Gaza 37.99 18.5 54.2 14.0 28.7
Yemen, Rep. 95.42 4.0 6.2 4.0 0.0
Zambia 80.06 10.0 8.3 17.8 6.4
Zimbabwe 23.78 55.5 23.3 56.5 21.1

*VAT does not exist for the case study purchase not scored.

A time of 0.0 indicates that an audit is unlikely and so the economy receives the best distance to frontier score of 100 for this component of the post-filing index.
Where an economys data sits within the highest 5% of the post-filing components range, these economies are allocated the worst distance to frontier score


of 0 for that component of the post-filing index.

Note: Where there is No practice yet, VAT does not exist or CIT does not exist, these components of the post-filing index are ignored and the remaining
components are averaged to create the post-filing score. Where there is No refund, these economies are allocated the worst distance to frontier score of nil
for that component of the post-filing index.
Note: There is no data for Somalia as there is currently no practice yet.

144 Paying Taxes 2017. Appendix 3

 The Total Tax Rate included in the survey by the
World Bank Group has been calculated using
World Bank Group the broad principles of the PwC methodology.
Paying Taxes team The application of these principles by the World
Bank Group has not been verified, validated or
Rita Ramalho audited by PwC, and therefore, PwC cannot make
Joanna Nasr any representations or warranties with regard to
the accuracy of the information generated by the
Nadia Novik World Bank Groups models. In addition, the World
Emily Jane Bourke Bank Group has not verified, validated or audited
Rodrigo A. Sarmento de Beires any information collected by PwC beyond the
scope of Doing Business Paying Taxes data, and
Edgar Chavez therefore, the World Bank Group cannot make any
representations or warranties with regard to the
accuracy of the information generated by PwCs
own research.
PwC Paying Taxes
team The World Bank Groups Doing Business tax
ranking indicator includes three components in
Neville Howlett addition to the Total Tax Rate. These estimate
Tom Dane compliance costs by looking at hours spent on tax
work, the number of tax payments made in a tax
Gwendolin Chau year, and evaluate and score certain post-filing
Sopheaktra Meas compliance processes. These calculations do
not follow any PwC methodology but do attempt
to provide data which is consistent with the tax
compliance cost aspect of the PwC Total Tax
Contributionframework.
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International DevelopmentAssociation.
11/16. Design Services 30038.

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The data tables 145

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